Fifth Grade
Lana and Jane are arguing about how to calculate the cost of a share of stock and then the gain or loss when they go to sell it. Lana says you multiply the total amount of the shares by the amount of the share of stock to figure out how much you paid for the initial stock investment and then subtract that from the amount the stock is worth now. Jane says you multiply the amount of shares you are purchasing by 100 to get the initial investment and then subtract the amount it is worth now from the initial investment. Who is right? Explain and defend your answer.
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ReplyDeletelana is corect becuse you multiply the number of the stock times shares to figure out amout the stocks is worth now.
Lana is correct because you multiply the total amount of shares that you have bought by the amount of the stock cost for each share of the company. You do that because it is how many shares you bought times the amount it cost. You would also be paying the wrong amount if you did the process differently and not accidently gotten it right, you would be a criminal. The way you can tell if it's a gain over loss is if the answer is more than you bought it for. If the answer is less than you bought it for, it would be a loss. DUN DUN DUUUUN!-
ReplyDeleteWe think Lana is correct because you are supposed to multiply the cost of the shares times the amount of shares you are buying. Jane is not correct because you don't automatically multiply the cost of shares times one hundred. The only reason that you would would be if you were buying 100 shares. Why you do multiply it by the number of shares you're buying is because you're going to pay that much that many times. After you've had it and want to sell it, you need to calculate your gain or loss. The way you do this is to subtract the amout when you bought it by the amount that it costs now. For example: if you bought 20 shares of Hershey's and you paid 5 dollars per share, but the cost now is 10 dollars per share, you would want to sell it because you would make a small profit.
ReplyDeleteLana is correct because if you multiply by 100 like Jane , she is thinking of volume of shares. When you use that method in this case it will not give you an accurate conclusion. Lana however is using The Initial Stock Management. That is the correct method.
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