A stockbroker placed the following order for a customer:
• 50 shares of Kaiser Aluminum preferred at $100 a share
• 100 shares of GTE preferred at $27.20 a share
• 20 shares of Boston Edison preferred at $12.20 a share
What is the weighted arithmetic mean price per share?
$99.50
$46.85
$67.19
$27.20
(50*100 + 100*27.20+ 20*12.20)/(50+ 100+20) =
$7964/170
= $46.85
To calculate the weighted arithmetic mean price per share, we need to multiply the number of shares by the price per share for each stock, then sum the results, and finally divide by the total number of shares.
For Kaiser Aluminum preferred:
Number of shares = 50
Price per share = $100
Total cost = 50 * $100 = $5000
For GTE preferred:
Number of shares = 100
Price per share = $27.20
Total cost = 100 * $27.20 = $2720
For Boston Edison preferred:
Number of shares = 20
Price per share = $12.20
Total cost = 20 * $12.20 = $244
Total cost of all shares = $5000 + $2720 + $244 = $7964
Total number of shares = 50 + 100 + 20 = 170
Weighted arithmetic mean price per share = Total cost / Total number of shares
= $7964 / 170
= $46.85
Therefore, the weighted arithmetic mean price per share is $46.85.
To find the weighted arithmetic mean price per share, you need to calculate the average price per share weighted by the number of shares purchased.
First, calculate the total cost for each stock:
50 shares of Kaiser Aluminum preferred at $100 a share = 50 * $100 = $5000
100 shares of GTE preferred at $27.20 a share = 100 * $27.20 = $2720
20 shares of Boston Edison preferred at $12.20 a share = 20 * $12.20 = $244
Next, calculate the total number of shares purchased:
50 shares of Kaiser Aluminum + 100 shares of GTE + 20 shares of Boston Edison = 170 shares
Now, calculate the weighted average price per share by dividing the total cost by the total number of shares:
($5000 + $2720 + $244) / 170 = $7964 / 170 = $46.85
Therefore, the weighted arithmetic mean price per share is $46.85.
The correct answer is: $46.85