Question

Zeke bought 10 shares of a company's stock at a price of $21.20 per share. He now sees that the price per share of his investment is $32 His broker informs him that the price of the shares may see a decline in the future.

Zeke should ideally _____ the assets because he slands to earn a profit of ______ per share from the transaction.

Answer 1

Zeke should sell his shares at the current price of $32 per share to achieve a profit of $10.80 per share, resulting in a total profit of $108 for 10 shares.

Step-by-step explanation:

Zeke should ideally sell the assets because he stands to earn a profit of $10.80 per share from the transaction. When examining the financial transaction, Zeke initially purchased shares at $21.20 each. With the current price at $32.00 per share, the capital gain per share is the difference between the selling price and the buying price, which is $32.00 - $21.20 = $10.80. Since Zeke has 10 shares, his total profit before considering any transaction fees or taxes would be 10 shares × $10.80 per share = $108.00.

Zeke's decision should also consider the broker's warning about a potential decline in the share price. If he believes there's a credible risk of a price drop, he may decide to sell the shares to realize his gains before any potential decline erodes his profits.