Question

Rauol made an investment in 155 shares of stock in a load fund for 3,117.05. After one year, the stock had a net asset value of18.35 per share. If Rauol redeems all 155 shares, which of the following is a correct statement?

1) Rauol will have a loss of $272.80.
2) Rauol will have a profit of $272.80.
3) Rauol will have a profit of $2,844.25.
4) There is not enough information to calculate profit or loss.

Answer 1

To calculate the profit or loss from selling the shares, multiply the number of shares by the purchase price to find the total cost, and multiply the number of shares by the selling price to find the total proceeds.

Step-by-step explanation:

To calculate the profit or loss from selling the shares, we need to find the total cost of the shares and the total proceeds from selling the shares. The total cost is found by multiplying the number of shares by the purchase price: 155 shares * $18.35. The total proceeds is found by multiplying the number of shares by the selling price: 155 shares * $18.35. To find the profit or loss, subtract the total cost from the total proceeds.

Given that the purchase price was $3,117.05, the total cost is 155 shares * $18.35 = $2,845.25. The total proceeds would be 155 shares * $18.35 = $2,845.25. Subtracting the total cost from the total proceeds, we get a profit of $0. Therefore, option 4) There is not enough information to calculate profit or loss is the correct statement.