Corporations can issue two types of stock: common stock and preferred stock. If you own common stock in a company, then you have a proportional ownership interest in that company. You do not have to buy all your common stock in a company at the same time but rather you can spread out your investment over a period of time. Since the purchase price of common stock typically changes every day due to market forces, common stock purchased at different points in time will cost different amounts of money. To determine the average value of your common stock, all you need is a couple basic pieces of information and a few simple calculations.
Calculate the total amount of money spent on acquiring all your shares of common stock in a particular company. For example, if you bought 100 shares of common stock in Company X at $15 per share, 200 shares of common stock in Company X at $21 per share and 300 shares of common stock in Company X at $23, you would determine the total acquisition price of these shares as follows: [(100 x $15) + (200 x $21) + (300 x $23)] = ($1500 + $4200 + $6900) = $12,600.Step 2
Add together the total number of shares of common stock you purchased in a particular company. Continuing with the same example, you would calculate the total number of shares as follows: (100 + 200 + 300) = 600 shares.Step 3
Divide the number you got in Step 1 (the total cost of acquiring all your shares of stock in a particular company) by the number you got in Step 2 (the total number of shares of common stock your purchased in a particular company). Continuing with the same example, you would divide $12,600 by 600 shares to get $21 as the average price of common stock.
- If you do not know how much you paid for your shares of common stock in a company, many websites such as Yahoo! Finance offer a free searchable database of historical stock prices.
Lisa S. Kramer is a licensed attorney practicing civil litigation and estates and trusts law in southern Florida. She received her Bachelor of Arts in English from the University of Florida, where she graduated Phi Beta Kappa and cum laude. Kramer earned her Juris Doctor from the University of Florida Levin College of Law.