Question

Alcoa was $10.02 a share yesterday. Today it is at $9.75 a share. If you own 50 shares, did ou have capital gain or loss ? How much of a gain or loss did you have ? Express the capital gain/loss as a percent of the original price

Answer 1

A. Capital loss.

B. Capital loss = 2.69%

Explanation:

We have been given that Alcoa bought 50 shares at $10.02 yesterday. Today the share is at $9.75.

Let us find change in share's value.

`\text{Change in share's value }=\text{Final value-Initial value}`

`\text{Change in share's value }=\$9.75-10.02`

`\text{Change in share's value }=-\$0.27`

Since the value of share decreased $0.27, therefore, we will have a capital loss.

Let us find the purchase price and revenue generated from selling 50 shares.

`\text{Purchasing cost of 50 shares}=50* 10.02`

`\text{Purchasing cost of 50 shares}=501`

So the purchasing cost of 50 shares will be $501.

`\text{Revenue generated from selling 50 shares}=50* 9.75`

`\text{Revenue generated from selling 50 shares}=487.5`

So, after selling our 50 shares we will get $487.5.

We will use percentage change formula to find our loss percent.

`\text{Percentage change}=\frac{\text{Final value - Original value}}{\text{Original value}}* 100`

`\text{Percentage change}=(487.5-501)/(501)* 100`

`\text{Percentage change}=(-13.5)/(501)* 100`

`\text{Percentage change}=-0.0269461* 100`

`\text{Percentage change}=-02.69461\%`

As we are getting a negative percentage, therefore, we have a capital loss of 2.69%.