Question

mark buys 250 shares of stock in a fund with a net asset value of $25.17 and an offer price of $25.30. mark wants to sell all of his shares when he can profit $1,000. if mark sells his shares today, he would have proceeds of $7,300. determine if mark should sell his shares today and why. a. mark should not sell his shares because he would have a loss rather than a profit. b. mark should not sell his shares because he would not have as much profit as hed like. c. mark should sell his shares because he will make the profit he wants to make. d. there is not enough information given to know if mark should sell his shares or not.

Explanation:

Step1: Calculate Cost of Buying

To find the cost Mark paid for the shares, we use the offer price. The formula for total cost is \( \text{Number of Shares} \times \text{Offer Price} \). So, \( 250 \times 25.30 = 6325 \).

Step2: Calculate Profit if Sold Today

Profit is calculated as \( \text{Proceeds} - \text{Cost} \). Given proceeds are \( 7300 \) and cost is \( 6325 \), the profit is \( 7300 - 6325 = 975 \).

Step3: Compare Profit with Desired Profit

Mark wants a profit of \( 1000 \). The profit he would get today is \( 975 \), which is less than \( 1000 \). So he should not sell as he doesn't have the desired profit.

Answer:

b. Mark should not sell his shares because he would not have as much profit as he'd like.