Question

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? A. You'll suffer a loss of $15. B. You'll suffer a loss of $150. C. You'll make a profit of $150. D. You'll make a profit of $15.

Answer 1

Assuming you mean 25+1/4 and 20+1/4, you bought your stock for 20+1/4, so that means your profit (or loss) is (25+1/4)-(20+1/4)=5. SInce you have 30 stocks, 5*30=150=your profit. 

Answer 2

C. You'll make a profit of $150.

Explanation:

We have been given that a share of stock in the Lofty Cheese Company is quoted at
`25(1)/(4)`. You hold 30 shares of that stock. You bought the stock at
`20(1)/(4)`.

Let us find cost of 30 shares by multiplying cost of each share by 30.

`\text{Cost of 30 shares}=(20(1)/(4))* 30`

`\text{Cost of 30 shares}=((81)/(4))* 30`

`\text{Cost of 30 shares}=((81* 30)/(4))`

`\text{Cost of 30 shares}=((2430)/(4))`

Now let us figure out amount earned from selling these stocks.

`\text{Earnings from 30 shares}=(25(1)/(4))* 30`

`\text{Earnings from 30 shares}=((101)/(4))* 30`

`\text{Earnings from 30 shares}=((101* 30)/(4))`

`\text{Earnings from 30 shares}=((3030)/(4))`

Since we know that profit is difference between total revenue (earnings) and cost. So we will subtract cost of 30 shares from revenue earned from 30 shares.

`\text{Profit}=\text{Total revenue - Cost}`

`\text{Profit}=(3030)/(4)-(2430)/(4)`

`\text{Profit}=(3030-2430)/(4)`

`\text{Profit}=(600)/(4)`

`\text{Profit}=150`

Therefore, you'll make a profit of $150 and option C is the correct choice.