Question

Alcoa was $10.02 a share yesterday. Today it is at $9.75 a share. If you own 50 shares, did ou have capital gain or loss ? How much of a gain or loss did you have ? Express the capital gain/loss as a percent of the original price

Answer 1

Answer:

A. Capital loss.

B. Capital loss = 2.69%

Step-by-step explanation:

We have been given that  Alcoa bought 50 shares at $10.02 yesterday. Today the share is at $9.75.

Let us find change in share's value.

$\text{Change in share's value }=\text{Final value-Initial value}$

$\text{Change in share's value }=\ 9.75-10.02$

$\text{Change in share's value }=-\ 0.27$

Since the value of share decreased $0.27, therefore, we will have a capital loss.

Let us find the purchase price and revenue generated from selling 50 shares.

$\text{Purchasing cost of 50 shares}=50\times 10.02$

$\text{Purchasing cost of 50 shares}=501$

So the purchasing cost of 50 shares will be $501.

$\text{Revenue generated from selling 50 shares}=50\times 9.75$

$\text{Revenue generated from selling 50 shares}=487.5$

So, after selling our 50 shares we will get $487.5.

We will use percentage change formula to find our loss percent.

$\text{Percentage change}=\frac{\text{Final value - Original value}}{\text{Original value}}\times 100$

$\text{Percentage change}=\frac{487.5-501}{501}\times 100$

$\text{Percentage change}=\frac{-13.5}{501}\times 100$

$\text{Percentage change}=-0.0269461\times 100$

$\text{Percentage change}=-02.69461\%$

As we are getting a negative percentage, therefore, we have a capital loss of 2.69%.