Two years ago, Lizzy Martinez, from Atlanta, GA, invested $1,000 by buying 125 shares (8$ per share NAV) in the Can't Lose Mutual Fund, an aggressive growth no-load mutual fund. Last year, she made two additional investments of $500 each (50 shares at $10 and 40 shares at $12.50). Lizzy reinvested all of her dividends. So far, the NAV for her investment has risen from $8 per share to $13.25. To finally determine the average-cost basis of shares sold, you multiply the average price per share times the number shares sold-in this case, 60. What is the total cost basis for Lizzy's 60 shares?
Two years ago, Lizzy Martinez, from Atlanta, GA, invested $1,000 by buying 125 shares (8$ per share NAV) in the Can't Lose Mutual Fund, an aggressive growth no-load mutual fund. Last year, she made two additional investments of $500 each (50 shares at $10 and 40 shares at $12.50). Lizzy reinvested all of her dividends. So far, the NAV for her investment has risen from $8 per share to $13.25. To finally determine the average-cost basis of shares sold, you multiply the average price per share times the number shares sold-in this case, 60. What is the total cost basis for Lizzy's 60 shares?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Two years ago, Lizzy Martinez, from Atlanta, GA, invested $1,000 by buying 125 shares (8$ per share NAV) in the Can't Lose Mutual Fund, an aggressive growth no-load mutual fund. Last year, she made two additional investments of $500 each (50 shares at $10 and 40 shares at $12.50). Lizzy reinvested all of her dividends. So far, the NAV for her investment has risen from $8 per share to $13.25.
To finally determine the average-cost basis of shares sold, you multiply the average price per share times the number shares sold-in this case, 60. What is the total cost basis for Lizzy's 60 shares?
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