Question

in september 2018 td bank issued the new 'series 20' preferred shares .in September you bought 100 shares for $25 per shares ,in November you bought 80 more shares for $24 per share and in December bought another 220 shares for $21 per share .

A ) calculate the average price you paid per share .

B) the price of td share recently. fell to $20/share so you are considering buying more shares . how many more shares would you need to buy to reduce the overall average price paid to $21.25/share ?

C)you did not buy any more shares because you thought the share price might fall even further . However , a few weeks later , you bought another 500 shares which reduced the overall average price paid to $20.75 . What price per share did you pay for the 500 shares ?

Answer 1

(a) The average price you paid per share = (100*25 + 80*24 + 220*21)/(100 + 80 + 220) = $22.6/share

(b) Let x be the number of shares would you need to buy to reduce the overall average price paid to $21.25/share.

(100*25 + 80*24 + 220*21 + x*20)/(100 + 80 + 220 + x) = 21.25

x = 432 shares

(c) Let x be the price per share.

(100*25 + 80*24 + 220*21 + 500*x)/(100 + 80 + 220 + 500) = 20.75

x = $13.27/share

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