How do I figure out how many shares of a stock can I buy for any given amount, w/o actually buying them?
I am a college student, and was given an assignment where I have $100,000 fake dollars and I have to invest in 10 stocks. I have to buy as many shares of each without exceeding the limit. I need an answer that is simple, something along the lines of "Stocks for Dummies". I have been on NASDAQ, NYSE, and YAHOO! FINANCE, and I am just illiterate when it comes to stocks. Thanks
The answer is by using simple mathematics.
First you need to decide how much of each stock you are going to buy - since not all stocks are priced equally some would be $20, other $400 and some 0.05 cents.
$100,000 over ten stocks... Decide what ratio you will hold of each stock. E.g. 6:3:4:1:9:4:3:7:9:2
So totalling the ratio is 48. Now you can use a combination of the ratios and fractions to find out how much stock you can hold with your $100,000.
I may have left you out on a limb there - but this calculation is uneccessary. Why don't you just buy your stock one by one until you run out of money? :P
OK Lets try the example with 2 stocks and $100K
you want the weighting to be 3:4
so you want
3/7ths of your money to go to 1 stock
4/7ths of your money to go to 1 stock
3/7*100K=$42857.14
4/7*100K=$57142.85
Now say stock ZXC was $5 each and stock ABC was $67
Now you go:
$57142.85/$67=852.88 Stocks
$42857.14/$5=8571.43 Stocks
There you go. Now do the similar calculation with your ten stocks! Haha!
Good Luck!
Stock Investing For Dummies ( cd 1) part 3
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