Question

On Monday, investor bought 100 shares of stock On Tuesday, the value of the shares went up 3% How much did the investor pay for the 100 shares if he sold them wednesday morning for $1236.

A) $1,200

B) $1,210

C) $1,224

D) $1,236

Answer 1

A) $1,200. The investor initially paid $1,210 for the 100 shares before the 3% price increase, which led to the final selling price of $1,236 on Wednesday.

Step-by-step explanation:

The correct answer is option B, $1,210. To find out how much the investor paid for the 100 shares before the value increase, we need to work backwards from the selling price.

Since the value of the shares went up 3% by Wednesday, we can consider that 103% of the original price equals $1,236.

Let us represent the original price by P. The equation to represent this situation would be: P * 1.03 = $1,236.
To find P, the original price, we divide $1,236 by 1.03:

P = $1,236 / 1.03

P = $1,200. However, we must also account for the fact that the investor sold them on Wednesday after a 3% increase in value, indicating that the original purchase price would be the value before this 3% increase. Therefore, the correct purchase price would be $1,200 before the increase.