A community for students.

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

anonymous

  • one year ago

Need help urgently; it's financial math! Will fan and medal anyone who can help!

  • This Question is Closed
  1. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    DAY STOCK TICKER HIGH CLOSE 1 Ferber Inc FER 24.76 19.25 2 Ferber Inc FER 25.16 19.87 3 Ferber Inc FER 26.81 20.19 4 Ferber Inc FER 25.90 21.17 5 Ferber Inc FER 26.05 22.43 Suppose you purchased 87 shares of Ferber stock on Day 1 at the high price. What is the return on your investment, if you sold the stock on Day 5 at the high price? 4.95% 5.21% 16.52% 35.32%

  2. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    @whpalmer4 So sorry to bother you but do you think you could help me with this one too? You were extremely helpful in the other question and I actually understood it

  3. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    okay, what is your basis (cost) for the Ferber stock if you bought 87 shares at the Day 1 high?

  4. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    there's a shortcut you can take in this problem, by the way, but I'll wait until we've done the whole thing the "long" way to tell you

  5. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    24.76

  6. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Or do I multiply 24.76 by 87 ?

  7. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    okay, that's the basis for 1 share, but you bought 87 of them, right?

  8. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    you've stumbled across the shortcut: if we buy and sell the same quantity of shares, all we have to is figure out the percentage change of the share price. this does NOT work if we don't have the same number of shares bought and sold...

  9. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    24.76 * 87 = 2,154.12

  10. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Right. And if she sells at the high price on Day 5, how much does she receive?

  11. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    I'm not sure how to do that math, do I divide it or multiply and then subtract or something else?

  12. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    what is the high price on day 5?

  13. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    26.05

  14. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    so, if she sells 87 shares at 26.05, how much does she receive?

  15. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    She would receive $2,266.35

  16. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    Okay. How much of a percentage increase is $2266.35 over 2154.12?

  17. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    I know the monetary difference is $115.23 but I'm not sure how to see the percentage increase

  18. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    okay, to find the percentage change between \(a\) and \(b\), \[\text{% change} = \frac{b-a}{a} * 100\%\] For example, if you go from 10 to 11: \[\frac{11-10}{10}*100\% = 10\%\]

  19. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    And to check, if you compute \(10\%\) of \(10\), that's \(1\), so increasing \(10\) by \(10\%\) gives you \(10+1 = 11\) just as we would expect from my example.

  20. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    might be easier to remember as \[\text{% change} = \frac{finish - start}{start} * 100\%\]

  21. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    So B is 2,266.35 and A is 2,154.12 correct? So 2,266.35-2,154.12 = 115.23 and that divided by 2,154.12 = 0.05349284 * 100% = 0.05349284

  22. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    well, pretty close :-) 2266.35-2154.12 = 115.23 115.23/2154.12 = 0.0521 multiply that by 100% and you get 5.21%

  23. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    So the answer is 5.21%? Thank you so much once again for your patience and help!

  24. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    sorry, 112.23, not 115.23 yes, the answer is 5.21%. Notice that we could get there more quickly by simply computing the percentage change of the share price: \[\frac{26.05-24.76}{24.76}*100\% = 5.21\% \]

  25. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    but that works only if you have the same number of shares!

  26. whpalmer4
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    If you had a more complicated problem, say Suzy buys 100 shares at $10, and sells 70 shares at $20, and the shares are now valued at $25, how much is the total return on her investment? there you could not use the shortcut, because some of the shares are sold at a different price, and some of them aren't sold at all. value of her investment at the end would be 70*20 + (100-70)*25 = 1400+750 = 2150 return is 2150-100*10 = 1150 which is \[\frac{2150-1000}{1000} *100\%= 11.5\%\] (and 11.5% is not the amount the price went up!)

  27. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.