Question

An investigator purchased 150 shares of stocks at $12.60 per share, and sold the shares later for $11.94 per share. Calculate the profit or loss of the transaction

Answer 1

Since the value is negative his investment resulted in a loss of $99.

Explanation:

In order to know the profit or loss margin of the investor we need to know how much was invested, for that we multiply the amount of shares he bought by the value of each share. So we have:

invested = (total shares)*(price per share) = 150*12.6

invested = $1890

He then sold all his shares for a different price, we repeat the process above to know how much he obtained from that. We have:

returned = (total shares)*(price per share) = 150*11.94 = $1791

In order to compute his profit or loss margin we subtract the value he obtained by selling the shares by the value at which they were bought. So we have:

loss = returned - invested = 1791 - 1890 = $-99

Since the value is negative his investment resulted in a loss of $99.

Answer 2

Given Information:

Number of shares = 150

Buying rate = $12.60 per share

Selling rate = $11.94 per share

Required Information:

Profit or loss = ?

Answer:

Loss = $99

Explanation:

The total purchasing cost of the shares is

C = Number of shares*Buying rate

C = 150*$12.60

C = $1890

The total selling cost of the shares is

S = Number of shares*Selling rate

S = 150*$11.94

S = $1791

Profit or loss = Selling cost - Buying cost

Profit or loss = $1791 - $1890

Profit or loss = -$99

Therefore, the investigator has incurred a loss of $99 by this transaction.