Showing posts with label sale. Show all posts
Showing posts with label sale. Show all posts
Monday, August 24, 2015
How to Measure Stock Performance
Determine the original stock price. This is the price of the stock when you purchased it. Let's say you purchased the stock for $50 per share.
Determine the current or ending stock price. The ending stock price is its price when sold, say, at the end of the year for tax purposes. Let's say you are considering the sale of your stock, but want to know its performance first. The current value of the stock is $60.
Determine the stock's earnings. This is the difference between the ending (or current) price and the original purchase price. The calculation is: $60 - $50 = $10.
Calculate the stock's performance. Divide the stock's earnings by the original amount paid. The calculation is: $10 / $50 = .20, or 20 percent. This is your return on investment.
How to Calculate Stock Trade Profit (6 Steps)
Review the components of a stock trade (a sell or buy). A complete stock trade (opened and closed order) would be buying a share of stock and then selling it at a new price. The profit depends on the difference between what you paid and the price you sell the stock for, as well as the sales commission/transactions costs, if any.
Work through an example. Let's assume you buy a stock for $100 and sell it for $200. The profit on the sale is $100, but this assumes there were no commissions or transactions costs associated with the sale.
On the confirmation sheet sent to you by the broker, look up the compensation associated with the order to both buy and sell. The compensation may also be called a 'mark-up' or 'mark-down.' This is clearly stated on your trade order form if you use a broker. Discount brokers can charge as little as $5 per trade, but full-service brokers can charge as much as $100. Remember that a stock trade consists of two orders: a purchase and a sell. In the trade example from Step 2, the profit after using a full-service broker who charges $100 would be -$100.
Do the calculation for a stock trade profit for a discount broker. The calculation is:
($200 - $100) (change in stock price) - $10 (commission from purchase and sale) = $90.
Calculate the stock trade profit for a direct purchase program. Let's assume one company has a program where you can purchase shares directly from the company. Ongoing fees include a one-time $8 setup fee, a $2 fee each time you add money to your account from your bank account and a 5 cents per share commission. There's also a $5 fee when you sell stock.
Do the calculation. Using the same information from Step 1, the calculation is:
($200 - $100) (change in stock price) - $8 (one-time set up fee) - $2 (for funding the account from your bank account) - $5 (sale of stock) - 10 cents (commission from purchase and sale) = $84.90.
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