Question

1. An investor bought 5,000 preferred shares (par value $1.00) of BC Resources at $.75.5 and received a dividend of $.05. He then sold them at $.80. What was the investor’s total gain in dollars? What was the percentage gain?

Answer 1

Answer to Question #38590 – Math - Other

An investor bought 5,000 preferred shares (par value $1.00) of BC Resources at$.755 and received a dividend of $.05. He then sold them at$.80. What was the investor’s total gain in dollars? What was the percentage gain?

Solution:

He bought 5000 preferred shares for $5000 (because the cost is $1.00 par value)

The real cost is $0.755 per value. So, he gained $5000 - $0.755 * 5000 = $1225

After that he received a dividend of $0.05 -> 5000 * $0.05 = $250

And after, he sold them at $0.8, so he earned -> 5000 * $0.8 = $4000

Gain = $4000 + $250 + $1225 - $5000 = $475

Percentage of gain is = $475 * 100% / $5000 = 9,5%