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| *Ostroff, Fair and Company>>>Investing |
Need help on stock stuff for math class? |
Lets say Bob bought 10 shares of McDonald stock at the rate of $20 per share ($200 worth). One month later, the stock went up to $40 ($400 worth). The next month, the stock dropped to $30 ($300 worth). 1. If stocks are considered as "risky". Can Bob just wait for a month till stocks increase and then sell it? 2. Can Bob collect profits from the stock without selling the stock? (for example: Bob collected $100 in company's profits on the second month without selling his stock, is this possible?) This question may be stupid but I want to save myself form embarrassment in case I miss some very simple 1st grade math. 3. Lets say Bob sell his stock on the 3rd month. Did Bob lost $100? Thanks When you buy a a stock, this is your cost, lets say in your example, $200. You only make a profit or loss when you sell. So in your example if you sold after the first month at $400, you would have made a profit of $200. If you did not sell until the third month at $300, you would have made a profit of $100. Remember when you bought the stock, I told you that is your cost, so that is $200, and never changes. So again when you buy that is your cost, and when you sell, the difference is your profit or loss. Also, yes you can collect profits from the company only during the time you own the stock. This is called "dividends". Some companies pay them and some don't. he can if the stock goes up.2 no. 3 depends on the price of the stock if the stock was 30$ when he sold he did lose a hundred dollors not selling the second month but he gained a hundred selling at 30$ |
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