Economics Semester Exam

Question

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Question
An investor purchased 50 shares of stock in a company in 2015. At the time the investor purchased the stock, the value of the stock was priced at $5
per share. The investor sold all 50 shares of stock in 2019. The value of the stock at the time of sale was $6.50
per share. What is the capital gain the investor earned on this investment?(1 point)
Responses

$75
75 dollars

$250
250 dollars

$325
325 dollars

$50

Answer 1

To calculate the capital gain, we need to find the difference between the selling price and the purchase price, then multiply that by the number of shares.

1. Purchase price per share: $5
2. Selling price per share: $6.50
3. Number of shares: 50

First, calculate the total purchase price: \[ \text{Total Purchase Price} = \text{Purchase Price per Share} \times \text{Number of Shares} = 5 \times 50 = 250 \text{ dollars} \]

Next, calculate the total selling price: \[ \text{Total Selling Price} = \text{Selling Price per Share} \times \text{Number of Shares} = 6.50 \times 50 = 325 \text{ dollars} \]

Now, calculate the capital gain: \[ \text{Capital Gain} = \text{Total Selling Price} - \text{Total Purchase Price} = 325 - 250 = 75 \text{ dollars} \]

Therefore, the capital gain the investor earned on this investment is $75.