Question

Bob, a stock market investor, purchases 3,000 shares in company X at $1.25 per share. The company subsequently announced that it's closing a number of its retail stores, and the share price drops to $0.86 per share. Wishing to minimize his losses, Bob decides to sell his shares. How much of a loss does Bob make?

a) $1,170
b) $990
c) $1,020
d) $1,170,000

Answer 1

Bob makes a loss of $1,170 by selling his 3,000 shares at $0.86 each after purchasing them at $1.25 per share.

Step-by-step explanation:

To calculate the loss Bob makes from selling his shares, we need to compute the difference between the purchase price and the selling price of the shares. Originally, Bob purchased 3,000 shares at $1.25 each, giving us a total cost of ($1.25 per share × 3,000 shares = $3,750). After the price drop, he sells all his shares at $0.86 per share, which totals ($0.86 per share × 3,000 shares = $2,580). The loss is calculated by subtracting the selling amount from the cost amount: ($3,750 - $2,580 = $1,170). Therefore, the loss Bob makes is $1,170.