Question

Part A - Answer the questions 1. If you were a shareholder in these companies, then how much money would you own in stocks in the year 1925? 2. If you were a shareholder in these companies, then how much money would you own in stocks in the year 1927? 3. If you were a shareholder in these companies, then how much money would you own in stocks in the year 1929? 4. How did the stock market crash affect the companies?​

Answer 1

1925 stock values:

- General Electric: $39 per share

- Radio Corporation of America: $30 per share

So in 1925:

1. If I owned 100 shares of GE and 50 shares of RCA, my stock value would be:

GE: 100 shares * $39 = $3,900

RCA: 50 shares * $30 = $1,500

Total: $3,900 + $1,500 = $5,400

1927 stock values:

- General Electric: $59 per share

- Radio Corporation of America: $50 per share

2. So in 1927, my stock value would be:

GE: 100 shares * $59 = $5,900

RCA: 50 shares * $50 = $2,500

Total: $5,900 + $2,500 = $8,400

1929 stock values:

- General Electric: $95 per share

- Radio Corporation of America: $200 per share

3. So in 1929, my stock value would be:

GE: 100 shares * $95 = $9,500

RCA: 50 shares * $200 = $10,000

Total: $9,500 + $10,000 = $19,500

4. The stock market crash of 1929 devastated the stock values of many companies. It is likely that both General Electric and Radio Corporation of America saw significant declines in their stock prices in the years following the crash, losing most or all of the gains seen in the previous years. The companies themselves would have been negatively impacted by decreased investor confidence and reduced access to capital during the Great Depression.