Weighted Average Formula:
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The weighted average stock price calculates the average price paid for shares by accounting for different purchase prices and quantities. This gives investors a more accurate cost basis than a simple average.
The calculator uses the weighted average formula:
Where:
Explanation: The formula weights each purchase price by the number of shares bought at that price, giving more influence to larger purchases.
Details: Knowing your average cost per share is essential for determining profit/loss, making sell decisions, and tax reporting. It helps investors track performance across multiple purchases.
Tips: Enter at least one price and quantity pair. You can add up to two purchase transactions. All values must be positive numbers.
Q1: Why use weighted average instead of simple average?
A: Weighted average accounts for different purchase amounts, giving a more accurate cost basis that reflects your actual investment.
Q2: How many transactions can I calculate?
A: This calculator handles two transactions. For more complex portfolios, consider using spreadsheet software.
Q3: Does this include fees and commissions?
A: No, this calculates the share price average only. For true cost basis, you would need to factor in trading costs.
Q4: Can I use this for crypto investments?
A: Yes, the same principle applies to any asset purchased in multiple transactions at different prices.
Q5: How does this help with tax reporting?
A: Your average cost basis is needed to calculate capital gains when selling portions of your holdings.