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\begin{tabular}{|l|l|l|l|l|}
\hline Name of Stock & Symbol & Closing Price Day 1 & Closing Price Day 2 & Closing Price Day 3 \\
\hline Metropolis, Ltd & MTP & 17.95 & 18.25 & 18.28 \\
\hline Suburbia, Inc & SBR & 5.63 & 4.98 & 5.25 \\
\hline
\end{tabular}

Suppose you purchase 65 shares of Metropolis stock and 50 shares of Suburbia stock on Day 1 at the closing price. Which day, during the following two days, would be the best to sell both stocks, and by how much?

A. Day 2 is the best by \[tex]$13.00.
B. Day 3 is the best by \$[/tex]13.00.
C. Day 2 is the best by \[tex]$2.45.
D. Day 3 is the best by \$[/tex]2.45.



Answer :

GinnyAnswer
Let's determine the best day to sell the stocks and calculate the profit. Here's the step-by-step solution:

### Step 1: Calculate the total purchase price on Day 1
- Metropolis, Ltd. (MTP):
- Number of shares purchased: 65
- Closing price on Day 1: [tex]$17.95 - Purchase cost for Metropolis: \( 65 \text{ shares} \times \$[/tex]17.95/\text{share} = \[tex]$1166.75 \) - Suburbia, Inc. (SBR): - Number of shares purchased: 50 - Closing price on Day 1: $[/tex]5.63
- Purchase cost for Suburbia: [tex]\( 50 \text{ shares} \times \$5.63/\text{share} = \$281.50 \)[/tex]

- Total Purchase Price:
- [tex]\( \text{Total purchase price} = \$1166.75 + \$281.50 = \$1448.25 \)[/tex]

### Step 2: Calculate the selling price for each day
- Day 2:
- Metropolis Closing Price: [tex]$18.25 - Suburbia Closing Price: $[/tex]4.98
- Selling price for Metropolis: [tex]\( 65 \text{ shares} \times \$18.25/\text{share} = \$1186.25 \)[/tex]
- Selling price for Suburbia: [tex]\( 50 \text{ shares} \times \$4.98/\text{share} = \$249.00 \)[/tex]
- Total Selling Price on Day 2: [tex]\( \$1186.25 + \$249.00 = \$1435.25 \)[/tex]

- Day 3:
- Metropolis Closing Price: [tex]$18.28 - Suburbia Closing Price: $[/tex]5.25
- Selling price for Metropolis: [tex]\( 65 \text{ shares} \times \$18.28/\text{share} = \$1187.20 \)[/tex]
- Selling price for Suburbia: [tex]\( 50 \text{ shares} \times \$5.25/\text{share} = \$262.50 \)[/tex]
- Total Selling Price on Day 3: [tex]\( \$1187.20 + \$262.50 = \$1450.70 \)[/tex]

### Step 3: Calculate the profit for each day
- Profit on Day 2:
- [tex]\( \text{Profit} = \text{Total Selling Price on Day 2} - \text{Total Purchase Price} \)[/tex]
- [tex]\( \text{Profit} = \$1435.25 - \$1448.25 = -\$13.00 \)[/tex]

- Profit on Day 3:
- [tex]\( \text{Profit} = \text{Total Selling Price on Day 3} - \text{Total Purchase Price} \)[/tex]
- [tex]\( \text{Profit} = \$1450.70 - \$1448.25 = \$2.45 \)[/tex]

### Step 4: Determine the best day to sell
- Compare the profits on Day 2 and Day 3:
- Day 2: [tex]\(-\$13.00\)[/tex] (a loss)
- Day 3: [tex]\(\$2.45\)[/tex] (a profit)

From the calculations, it is evident that Day 3 is the best day to sell the stocks, yielding a profit of \[tex]$2.45. ### Conclusion - Day 3 is the best by \$[/tex]2.45.

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