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)

Question

Responses

$75
$75

$250
$250

$325
$325

$50

Answer 1

To calculate the capital gain, we first need to find out the total purchase price and the total selling price of the shares.

1. Total Purchase Price: The investor bought 50 shares at $5 per share. \[ \text{Total Purchase Price} = 50 , \text{shares} \times 5 , \text{USD/share} = 250 , \text{USD} \]

2. Total Selling Price: The investor sold 50 shares at $6.50 per share. \[ \text{Total Selling Price} = 50 , \text{shares} \times 6.5 , \text{USD/share} = 325 , \text{USD} \]

3. Capital Gain: The capital gain is calculated by subtracting the total purchase price from the total selling price. \[ \text{Capital Gain} = \text{Total Selling Price} - \text{Total Purchase Price} = 325 , \text{USD} - 250 , \text{USD} = 75 , \text{USD} \]

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

The correct response is: $75