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SELLING STOCKS
Investments12.4
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Vocabulary
Profit – The amount of money you make over and above the initial money invested.
Loss – The is the opposite of profit. Selling for less the initial money invested.
Commission- Amount paid to the broker.Net sale – The amount of the sale after
deductions are made.
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Selling for a Profit or Loss?
Reasons for selling to make a profit are obvious, but why would someone knowingly sell stock at a loss?
Prevent further lossEmergency and she needs the moneyPersonal reasons to no longer invest in a
companyReorganizing her portfolioChange brokers
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Formulas Needed
Amount of Sale = # of shares × price per shareNet Sale = Amount of sell – CommissionProfit(Loss) = Net Sale – Investment
If amount is negative, it is a LOSS!Commission = FeeCommission = # of shares × fee per shareCommission = Cost of Stock × percent
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Jacob bought 220 shares of Nintendo stock for a total of $22,772.05. Then he sold all shares for $109.50 per share plus a commission of $29.95.
a) What was the amount of the sale?
b) What was the net sale?
c) What was the profit or loss?
a) # shares × $ per share(220) × (109.50)
$24,090b) Amount of sell –
Commission
24090 – 29.95$24,060.05
c) Net Sale – Investment
24060.05 – 22772.05$1,288 Profit
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Warren bought 50 shares of Volkswagen stock for a total of $12,390.85. Then he sold all shares for $236.45 per share plus a commission of $9.95 plus $0.49 per
share.
a) What was the amount of the sale?
b) What was the net sale?
c) What was the profit or loss?
a) # shares × $ per share(50) × (236.45)
$11,822.50b) Amount of sell – Commission
11822.50 – (9.95 + 0.49 × 50)
11822.50 – (34.45)$11,788.05
c) Net Sale – Investment11788.05 – 12390.85
$602.80 Loss
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After the divorce, Madison sold all 200 shares of Apple stock for $ 124.45 per share plus a commission of 3.2¢ per share that Clayton and her purchased for $23,978.
a) What was the amount of the sale?
b) What was the net sale?
c) What was the profit or loss?
a) # shares × $ per share
(200) × (124.45)$24,890
b) Amount of sell – Commission
24890 – (0.032 × 200)
24890 – (6.40)$24883.60
c) Net Sale – Investment24883.60 – 23978
$905.60 Profit
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Questions?