buoyant wrote:John sold 100 shares of stock for $96 per share. For half his shares, this represented a 20% profit; for the other half, this represented a 20% loss. What was the net gain or net loss on this sale of stock?
a)No loss or gain
b)Gain of $400
c)Loss of $400
d)Gain of $800
e)Loss of $800
For half his shares -- 50 of the 100 shares -- this represented a 20% profit.
In other words, $96 is equal to 120% of the purchase price of each of these shares:
96 = 1.2x
960 = 12x
x = 80.
Since the selling price = 96 and the purchase price = 80, the profit per share = 96-80 = 16.
Total profit for these 50 shares= 50*16 = 800.
For the other half -- the remaining 50 shares -- this represented a 20% loss.
In other words, $96 is equal to 80% of the purchase price of each of these shares:
96 = 0.8y
960 = 8y
y = 120.
Since the selling price = 96 and the purchase price = 120, the loss per share = 120-96 = 24.
Total loss for these 50 shares= 50*24 = 1200.
Net loss = 1200-800 = 400.
The correct answer is
C.
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