Investors commonly purchase stocks at different price points. The weighted average price per share is a calculation that shows the average price of a specific stock held within a portfolio that the investor purchased at different price points. This calculation also takes into account varied quantities purchased in addition to the varied price points.
1. Determine the total number of a specific stock held in a portfolio. For example, assume you own 100 shares in a company's stock.
2. Multiply the price points that you purchased the stock at by the number of shares purchased, and add the sums. For example, assume you purchased 25 shares of a stock at $15 per share, 50 shares of the same stock at $20 per share, and another 25 shares at $30 per share. ($15 x 25) + ($20 x 50) + ($30 x 25) = $375 + $1,000 + 750 = $2,125
3. Divide the sum of the individual price points by the total number of shares purchased. Continuing the example from Step 2, $2,125 / 100 = $21.25. This figure represents the weighted average price per share.
- "Principles of Finance"; Scott Besley and Eugene Brigham; 2008
- Math Words: Weighted Average