# Calculate Average (Price)

1. Oct 28, 2011

### vertciel

Dear all,

Although the following question involves some terms using finance, I post it here since it seems to involve some probability. I hope that it will be fine.

Thank you very much for your help.

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Problem: Suppose that John buys shares in only one company and he does so as follows:

Date 1. He buys 10 shares @ $10. Date 2. He buys 5 shares @$20.
Date 3. He sells 6 shares @ $15. Date 4. He buys 10 shares @$20.

After Date 4, what is the average price per share for John's holdings?

Attempt at Solution :

Before Date 3, the weighted average price is given by:

$\frac{10}{15}10 + \frac{5}{15}20$