what is the purchase price 
the purchase price is the price an investor pays for an investment and the price becomes the investor s cost basis for calculating gain or loss when selling the investment the purchase price includes any commission or sales charges paid for the investment and the weighted average cost is used for multiple purchases of the same security understanding purchase priceassume for example an investor buys 100 shares of ford common stock on three different dates over a five year period including 100 shares purchased at a market price of 40 60 and 80 per share to determine the cost basis of the purchases the investor needs to calculate the weighted average cost which is the total dollar amount of the purchases divided by the number of shares purchased at 100 shares each the dollar amounts of ford stock purchases are 4 000 6 000 and 8 000 or a total of 18 000 and the purchase total is divided by 300 shares to equal 60 per share if the investor adds to the stock position they can calculate a new weighted average price by adding the dollar amount of the new purchases and the additional shares to the calculation the formula can also be adjusted for stock sales if the investor only sells a portion of the holdings with commission costs added the investor s weighted average cost might approximate 62 per share the differences between realized and unrealized gainsinvestors use the purchase price of an investment to calculate realized gains or losses for tax purposes and they report that activity on schedule d of irs form 1040 an investor reports a realized gain if they sell some or all of their investment holdings if they sell no securities the investor has an unrealized gain or loss which is not reported for tax purposes assume for example an investor sells 100 shares of ford stock at a sale price of 80 per share and uses the weighted average cost of 62 to calculate a realized gain of 18 per share the investor reports the number of shares along with the weighted average cost and the sale price per share on schedule d the total realized gain of 1 800 is long term because the investor held the shares for over one year the 1 800 long term capital gain is offset by any capital losses and the net gain is taxable using capital gains tax rates 