Difficulty: Beginner | Prerequisites: None, though basic arithmetic helps.
This topic sits near the start of an introductory microeconomics course. It introduces the mechanics of stock ownership, portfolio tracking, and gain/loss calculation before the course moves into market theory, supply and demand, and firm behaviour. You do not need any prior finance knowledge, but you should be comfortable with division, multiplication, and subtraction.
When $10,000 is invested in a single stock, you divide by the share price to find how many whole shares you can buy (no fractions allowed). The value of those holdings changes daily. To assess performance, you compare the current total value of your shares against what you originally paid. Gains and losses across multiple stocks are totalled to find the net worth of the portfolio.
Stock (share)
A unit of ownership in a publicly traded company. Owning one share means you hold a small fraction of that company.
In simple terms, buying a stock means you own a tiny piece of that business.
Ticker symbol (stock symbol)
A short abbreviation (usually 1 to 5 letters) used to identify a company on a stock exchange. For example, XOM is Exxon-Mobil and JPM is JP Morgan Chase.
Think of it as the company's nickname on the stock market.
Share price (stock price)
The cost of one share at a given point in time. This changes throughout every trading day.
52-week high
The highest price a stock has traded at over the past 12 months. Used as a benchmark for how well the stock has performed recently.
52-week low
The lowest price a stock has traded at over the past 12 months. Useful for understanding downside risk.
Portfolio
A collection of investments held by one person or entity. In this exercise, the portfolio contains shares in five different companies.
Think of it as your basket of stocks.
Gain (profit)
The positive difference when your current holdings are worth more than what you originally paid. If you bought at $100 and the stock is now $110, your gain per share is $10.
Loss
The negative difference when your current holdings are worth less than what you originally paid.
Net worth of portfolio
Total gains minus total losses across all holdings. This tells you whether the overall portfolio made or lost money.
In simple terms, it is the bottom line: did you come out ahead or behind?
The exercise uses a table with seven columns. Each row represents one company in the portfolio. Understanding what each column means is essential.
Company and Symbol: the full company name and its ticker. You look these up on a site such as Yahoo Finance.
Price of Stock, 1 Year Ago: the share price at the time of purchase. This is the baseline for all gain/loss calculations.
Number of Shares Purchased: how many whole shares $10,000 could buy at that price. Calculated as $10,000 divided by the share price, rounded down (you cannot buy a fraction of a share).
Highest Value Over Last 12 Months: the 52-week high multiplied by the number of shares. This is the best the holdings were worth at any point during the year.
Lowest Value Over Last 12 Months: the 52-week low multiplied by the number of shares. This is the worst the holdings were worth.
Current Worth of Stock: today's share price multiplied by the number of shares. This is what you could sell them for right now.
Value +/- Over Last 12 Months: current worth minus the original purchase cost (price per share times number of shares). A positive number is a gain; a negative number is a loss.
The bottom of the table aggregates the results across all five stocks: total gains, total losses, and the net worth of the portfolio (gains minus losses).
Every number in the table comes from a small set of operations. Work through them in order.
Step 1: Number of shares purchased
Take the fixed investment amount ($10,000).
Divide by the share price one year ago.
Round down to the nearest whole number. You cannot buy a partial share in this exercise.
Example: Exxon-Mobil at $82.31 per share. $10,000 / $82.31 = 121.49, rounded down to 121 shares.
Step 2: Highest portfolio value
Find the 52-week high for the stock (from Yahoo Finance historical data).
Multiply by the number of shares purchased.
Example: Exxon-Mobil 52-week high was roughly $87.36. Multiply by 121 shares = $10,570.56. (The table shows $87.36 as the per-share high and records the total holding value.)
Step 3: Lowest portfolio value
Same approach, using the 52-week low.
Example: Exxon-Mobil 52-week low was roughly $64.65. Multiply by 121 = $7,822.65.
Step 4: Current worth
Look up the current share price.
Multiply by the number of shares.
Example: Exxon-Mobil current price $75.49 times 121 = $9,134.29.
Step 5: Gain or loss per company
Subtract the original purchase cost from the current worth.
Original cost = price per share one year ago times number of shares.
Example: Exxon-Mobil original cost = $82.31 times 121 = $9,959.51. Current worth = $9,134.29. Loss = $9,134.29 minus $9,959.51 = negative $825.22.
Step 6: Portfolio totals
Add up all the gains (positive values only) to get Total Gain.
Add up all the losses (negative values only, treating them as positive for the sum) to get Total Loss.
Net worth of portfolio = Total Gain minus Total Loss.
\text{Shares Purchased} = \left\lfloor \frac{\$10{,}000}{\text{Price per Share}} \right\rfloor\text{Highest Holding Value} = \text{52-week High} \times \text{Shares Purchased}\text{Lowest Holding Value} = \text{52-week Low} \times \text{Shares Purchased}\text{Current Worth} = \text{Current Price} \times \text{Shares Purchased}\text{Gain or Loss} = \text{Current Worth} - (\text{Purchase Price} \times \text{Shares Purchased})\text{Net Portfolio Worth} = \sum \text{Gains} - \sum \text{Losses}Worked example (JP Morgan Chase, JPM)
Purchase price: $110.69 per share.
Shares purchased: floor($10,000 / $110.69) = floor(90.35) = 90 shares.
Original cost: 90 x $110.69 = $9,962.10.
Current price: $114.07. Current worth: 90 x $114.07 = $10,266.30.
Gain: $10,266.30 minus $9,962.10 = +$304.20.
This is exactly the arithmetic every retail investor does when checking a brokerage account. Apps like Robinhood, Fidelity, or Schwab display the same figures: cost basis, current value, and unrealised gain or loss. Understanding these calculations means you can verify what your brokerage is telling you rather than relying on a number on a screen.
Portfolio diversification, one of the implicit lessons here, is also core to real investing. The exercise spreads $10,000 across five very different companies (energy, banking, automotive, healthcare, food processing), which means a loss in one can be offset by a gain in another.
Rounding up the number of shares. Students sometimes round $10,000 / $82.31 = 121.49 up to 122 shares. You cannot do this. You can only buy whole shares, and you cannot spend more than $10,000, so you always round down (use the floor function).
Confusing per-share price with total holding value. The "highest value" column is not the 52-week high price. It is the 52-week high price multiplied by the number of shares you hold. The same applies to the lowest value and current worth columns.
Mixing up gain/loss direction. The formula is current worth minus original cost, not the other way around. If you reverse it, your gains appear as losses and vice versa.
Adding losses as negative numbers when totalling. The "Total Loss" row should be a positive dollar amount representing how much was lost. When calculating net worth, you subtract it from Total Gain. Students sometimes double-count the negative sign.
⚠️ You will almost certainly be asked to calculate the number of shares purchasable from a fixed budget. Remember: always round down.
⚠️ Know the difference between the price of a single share and the total value of your holdings. Exam questions may give you one and ask for the other.
⚠️ Be able to compute gain or loss for a single stock and for a portfolio of multiple stocks.
⚠️ Understand that diversification does not eliminate risk. In the sample data, three out of five stocks lost money, and two of those losses were substantial. The portfolio still came out slightly ahead because the gains outweighed the losses, but that is not guaranteed.
True or False: If a stock costs $45.00 per share and you have $10,000 to invest, you can buy 222.22 shares.
Answer: False. You can only buy 222 whole shares.
Fill in the blank: The gain or loss on a stock equals ______ minus ______.
Answer: Current worth minus original purchase cost.
True or False: The 52-week high column in the table shows the highest price per share.
Answer: False. It shows the highest total holding value (high price times number of shares).
True or False: A portfolio's net worth equals the sum of all gains plus the sum of all losses.
Answer: False. It equals total gains minus total losses.
Fill in the blank: To find the number of shares purchased, you divide $10,000 by ______ and round ______.
Answer: The share price at purchase; down.
Q: A stock is priced at $128.93 per share. You invest $10,000. How many shares can you purchase, and what is your total cost?
A: $10,000 / $128.93 = 77.56, rounded down to 77 shares. Total cost = 77 x $128.93 = $9,927.61.
Q: You bought 90 shares of a stock at $110.69 each. The current price is $114.07. What is your gain or loss?
A: Original cost = 90 x $110.69 = $9,962.10. Current worth = 90 x $114.07 = $10,266.30. Gain = $10,266.30 minus $9,962.10 = +$304.20.
Q: Your portfolio has gains of $990.64 across three stocks and losses of $891.00 across two stocks. What is the net worth of the portfolio?
A: $990.64 minus $891.00 = $99.64.
Q: A stock's 52-week high is $148.99 and you hold 77 shares. What was the highest value of your holdings during that period?
A: $148.99 x 77 = $11,472.23.
Q: Why can you not buy fractional shares in this exercise?
A: The exercise assumes traditional whole-share purchasing, which is the standard on most major exchanges. You must round down after dividing, because you cannot spend more than the $10,000 budget.
This connects to supply and demand because stock prices are determined by the balance of buyers and sellers in the market. When demand for a stock rises and supply stays constant, the price goes up, and vice versa.
It also connects to opportunity cost: the $10,000 invested in each stock could have been placed elsewhere (a savings account, bonds, a different stock). Evaluating whether the portfolio's $99.64 net gain was worth the risk involves comparing it against those alternatives.
Finally, it links to risk and return: the exercise illustrates that higher potential returns come with higher volatility. Seaboard Corp (SEB) had the largest absolute gain but also the widest spread between its 52-week high and low.
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