BTGmoderatorDC 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
Let x be the ORIGINAL price of each share that sold for a 20% PROFIT
So, 1.2x = price of each share that sold for a 20% profit
In other words, 1.2x = $96
So, x = 96/1.2 =
$80
So, these shares ORIGINALLY cost
$80 each
Let y be the ORIGINAL price of each share that sold for a 20% LOSS
So, 0.8x = price of each share that sold for a 20% loss
In other words, 0.8x = $96
So, x = 96/0.8 =
$120
So, these shares ORIGINALLY cost
$120 each
Let's first determine how much money John spent to BUY the 100 shares
50 shares at
$80 apiece cost $4000
50 shares at
$120 apiece cost $6000
TOTAL cost to BUY = $4000 + $6000 = $10,000
Now determine how much money John RECEIVED when we SOLD the 100 shares
Since he sold all 100 shares for $96 each, the TOTAL amount received = $9600
So, John SPENT $10,000 and he RECEIVED $9600
This represents a LOSS of $400
Answer: C
Cheers,
Brent
