CFA Level 1: Weighted Mean Price per Share Calculation

Weighted Mean Price per Share Calculation

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Question

A stockbroker placed the following order:

50 shares of Kaiser Aluminum preferred at $104 a share

100 shares of GTE preferred at $25 1/4 a share

20 shares of Boston Edison preferred at $9 1/8 a share

What is the weighted mean price per share?

Answers

Explanations

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A. B. C. D. E.

D

(50*104)+(100*25.25)+(20*9.125) = 7907.5. Weighted mean is 7907.5/170 = 46.51

To calculate the weighted mean price per share, we need to consider both the number of shares and their respective prices. The formula for weighted mean is:

Weighted mean price per share = (Sum of (Number of shares * Price per share)) / (Total number of shares)

Let's calculate the weighted mean price per share step by step:

  1. Calculate the total value of each stock:

    • Kaiser Aluminum preferred: 50 shares * $104 per share = $5,200
    • GTE preferred: 100 shares * $25 1/4 per share = $2,525
    • Boston Edison preferred: 20 shares * $9 1/8 per share = $182.50

  2. Calculate the total number of shares:

    • Total shares = 50 + 100 + 20 = 170

  3. Calculate the weighted mean price per share:

    • Weighted mean price per share = (Total value of all stocks) / (Total number of shares)
    • Weighted mean price per share = ($5,200 + $2,525 + $182.50) / 170
    • Weighted mean price per share = $7,907.50 / 170
    • Weighted mean price per share ≈ $46.51

None of the given answer choices match the calculated weighted mean price per share of approximately $46.51. Therefore, the correct answer is D. None of these answers.

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