A share of stock in the Lofty Cheese Company is quoted at 251/4. Suppose you hold 30 shares of that stock, which you bought at 201/4. If you sell your stock at 251/4, which one of the following statements would be true?

Question

Question 19 options:

A)

You'll make a profit of $150.

B)

You'll suffer a loss of $15.

C)

You'll suffer a loss of $150.

D)

You'll make a profit of $15.

Answer 1

To determine whether you'll make a profit or incur a loss from selling your shares, you'll need to calculate both the purchase price and the selling price of the shares.

1. Calculate the purchase price of the shares:

   • You bought 30 shares at a price of \( 20\frac{1}{4} \), which is equivalent to $20.25.
   • Total cost to buy the shares = \( 30 \times 20.25 = 607.50 \).

2. Calculate the selling price of the shares:

   • You sell 30 shares at a price of \( 25\frac{1}{4} \), which is equivalent to $25.25.
   • Total proceeds from selling the shares = \( 30 \times 25.25 = 757.50 \).

3. Calculate the profit or loss:

   • Profit or loss = Selling price - Purchase price.
   • Profit or loss = \( 757.50 - 607.50 = 150.00 \).

So, you will make a profit of $150.

The correct answer is:

A) You'll make a profit of $150.