Question

Tim purchases 3,000 shares in company X at $2.49 per share. The company subsequently announces a profit warning, and the share price drops to $2.24 per share. Wishing to minimise his losses, Tim decides to sell his shares. How much of a loss does Tim make? Give your answer in dollars to the nearest dollar

Answer 1

Explanation:

$\$1170$

Bob's initial investment is given by

Initial Investment =3,000×$1.25=$3,750.

When Bob sells the shares, he sells them for

Sold for price=3,000×$0.86=$2,580.

Therefore Bob's total LOSS is given by

Loss =$3,750−$2,580=$1,170.

Answer 2

$750

Explanation:

Tim's share price changes by $2.24 -2.49 = -0.25, so the change in the value of his investment is ...

(3000 shares)(-0.25/share) = -$750

Tim takes a loss of $750 when he sells.