a simple math question that many people will not answer correctly

it's no different than buying 2 cars at different prices and selling them for profit.

car 1: cost = 1000, sell = 1200, profit = 200

car 1a: cost = 1500, sell = 1700, profit = 200

total profit: 400

the answer should be 2.

 

If he bought it for 10 and thinks he can get 11, why cant he just short the 11 for an arbitrage? jk

answer is/should be 2.

 

OK, WTF is the answer?

 

delete

 

(money in hand $8)
purchase bird for $8.
sell bird for $9.
total profit = $1
(money in hand $9)

buy bird for $10.
at this point he had to pull another $1 from his pocket.
therefore, total profit at this point = -$1

sell bird for $11.


total profit after all transactions should = $0.


no?

 

So far...so good.

correct...so now he's at minus one.

still good...so now he's at $10 overall.

No...he started with 8..and now he has 10. that makes a profit of 2.

 

there isn't enough information.

we need to know if that was all the money he had.



well i guess you can't purchase something for more money than you possess. so he made $2.

 

let's simply:

for the sake of argument, let's say the guy has 20 bucks in his pocket.

20 - 8 (purchase of bird) = 12

12 + 9 (sale of bird) = 21

21 - 10 (purchase of bird) = 11

11 + 11 (sale of bird) = 22 in pocket

22 - 20 = $2 profit

am i missing something here? it can't get any easier than that.

 

They do. That's why I'm thinking it's wrong.

 

i was thinking the same thing.


some may answer 3 because if they start out with $8 and end up with $11 then they might just subtract those and get 3.

 

Doesn't matter. Even if he has no money & buys the birds entirely on credit, he ends up with $2. If he starts with $2, he ends up with $4, etc....

 

when he buys it back for 10, he dishes out an extra dollar only in relation to how much he sold it for. the actual balance after he buys it back is -9, not -1. transactions aren't relative, they are independent and have an aggregate effect on his total balance.

think about each transaction affecting his bank account. he takes out 8 bucks to buy it, and deposits 9 after he sells. bank account = +1. he has to withdraw 10 to buy it back again. bank account = -9.

right, if he buys it for 10 dollars and sells for 11, he has made 1 dollar of profit. but you must take this transaction together with the previous transaction. so he isn't buying it for 10 dollars, he already has it and his bank account reads -9. selling it for 11 lets him deposit the 11 in the bank and at the end of the day he is up 2 bucks.

unless of course, the question is just phrased to ignore the first transaction, and is really asking 'how much did he make in the 2nd sale,' in which case the answer WOULD be 1 dollar.

 

but he really started with $9 (the other dollar remained in his pocket until the second transaction).

 

whats the answer?

 

He made NOTHING.. $0

http://youlose.ytmnd.com/

 

I hope pirc never replies in this thread again.

 

If you didn't say $2, you may want to reconsider a career in any type of accounting field.

Actually, my advise would be to never trade stocks online either. Or go into business for that matter - you'll get ripped off once people figure it out.


Think of the chicken as an asset. If you buy a chicken for 8 bucks - you are minus 8 dollars, but you are plus one chicken:

Chickens Dollars
1 -8

now you sell the chicken for 9 bucks - so you lose a chicken, but you get back 9 dollars so....

Chickens Dollars
0 1

Now, you buy a chicken again (doesn't matter if it's the same chicken) for 10 dollars so your ledger looks like this at the end of the day:

Chickens Dollars
1 -9

You're actually in worse shape then before technically speaking, but low and behold, you unload the chicken for 11 bucks, so again, minus 1 chicken, plus 11 dollars

Chickens Dollars
0 2

 

What does this even mean? Seriously, you buy a chicken you're out 8 bucks but plus 1 chicken. thats all fine and dandny but who cares?

 

even if he starts with 9 dollars in his pocket:
1. he buys for 8 (9-8 = 1 in pocket), sells for 9 (9+1 = 10 in pocket).
2. buys back for 10 (10-10 = 0 in pocket), sells for 11 (11 in pocket).

he started with 9, ends up with 11. he made 2.

if he starts with 10:
1. buys for 8 (10-8 =2 in pocket), sells for 9 (9+2 = 11 in pocket)
2. buys back for 10 (11-10 = 1 in pocket), sells for 11 (11+1 = 12 in pocket).

he started with 10, ends up with 12. profit of 2.

i actually confused myself trying to figure out how some of these errant answers were achieved. i think it is kind of fascinating how people view and think about transactions differently. and it isn't an intelligence thing, because i have totally gone through strange and unnecessary thought processes before for other concepts.

 

I think all of you are dumbasses.