Answer to Question #202858 in Financial Math for sara

Question #202858

You purchase 75 shares of stock at $ 75 per share. The next day the stock drops 12%; however, a week later it increases in value by 5%. If you immediately sell your 75 shares, how much will you lose or gain (a) in dollar amount and (b) in percent?


1
Expert's answer
2021-06-07T03:31:11-0400

Total number of shares = 75

Price per share = $75

Total amount =75×75=$5625= 75 \times 75 = \$5625

The next day the stock drops 12%

Price per share =75×(10.12)=75×0.88=$66= 75 \times (1-0.12) = 75 \times 0.88 = \$66

However, a week later it increases in value by 5%.

Price per share = 66×(1+0.05)=$69.366 \times (1+0.05) =\$69.3

If you immediately sell your 75 shares:

Total amount for selling =75×69.3=$5197.5=75 \times 69.3 =\$5197.5

Difference between final and initial amount = 5197.5 -5625 = -427.5

(a) You will lose $427.5

(b) Percent change =427.55625×100=7.6  %= \frac{427.5}{5625}\times 100 = 7.6 \; \%


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