The values of Stock A and Stock B on a particular day are Rs. 50 and Rs. 80, respectively. An investor invests Rs. 100 in Stock A and Rs. 80 in Stock B. He sells all the stocks the next day when the value of Stock A is Rs. 55 and Stock B is Rs. 70. The profit made by the investor is Rs. ________
A
Step-by-Step Solution
Insight: Calculate the number of shares purchased for each stock using the initial investment and price, then find the total selling value.
Exam route: Shares of A = 100 / 50 = 2. Shares of B = 80 / 80 = 1. Selling value = 2 55 + 1 70 = 110 + 70 = 180. Total cost = 180. Profit = 180 - 180 = 0.
Learning route:
Step 1: Find the number of shares bought for Stock A. Investment = Rs. 100, Price = Rs. 50. Shares of A = 100 / 50 = 2.
Step 2: Find the number of shares bought for Stock B. Investment = Rs. 80, Price = Rs. 80. Shares of B = 80 / 80 = 1.
Step 3: Calculate the total selling value the next day. Price of A = Rs. 55, Price of B = Rs. 70.
Selling value of A = 2 * 55 = 110.
Selling value of B = 1 * 70 = 70.
Total selling value = 110 + 70 = 180.
Step 4: Calculate profit. Total cost = 100 + 80 = 180. Profit = Total selling value - Total cost = 180 - 180 = 0.
Trap warning: A common mistake is to just average the percentage changes or add the price differences (55 - 50 + 70 - 80 = -5) without weighting by the number of shares.
Verification: Cost = 180. Final value = 180. Profit = 0. Matches option A.