SELLING STOCKS

Investments12.4

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.

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

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

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

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

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

Questions?