an investor buys 400 shares of stock in a fund when the net asset value is $19.62 and the offer price is…
an investor buys 400 shares of stock in a fund when the net asset value is $19.62 and the offer price is $19.84. the investor sells these shares when the net asset value is $43.19 and the offer price is $43.56. determine the amount of profit the investor earns.\na. $9,576\nb. $9,488\nc. $9,428\nd. $9,340
Answer
Explanation:
Step1: Calculate the cost of buying
The cost of buying is the number of shares times the offer - price when buying. The number of shares is 400 and the offer - price when buying is $19.84. So the cost $C = 400\times19.84=7936$.
Step2: Calculate the revenue from selling
The revenue from selling is the number of shares times the offer - price when selling. The number of shares is 400 and the offer - price when selling is $43.56. So the revenue $R = 400\times43.56 = 17424$.
Step3: Calculate the profit
Profit $P=R - C$. Substitute $R = 17424$ and $C = 7936$ into the formula, we get $P=17424−7936 = 9488$.
Answer:
b. $9,488$