stock price calculation

$18.70 / 0.290626 sh comes to $64.343864/sh on my calculator ... how'd you get $64.343802?

And since they ALL round to $64.34, why does it matter???

db

The answer is complex and technical, but it has to do with how numbers are stored computers, how decimal fractions are stored in binary computers, how much precision your computer and how much precision your broker's computers can handle, how much precision your software and your broker's software use in doing their calculations, how the computer hardware rounds or truncates numbers. If you search on "floating point arithmetic" you'll get some insight.

And yet another option is for some software to use fixed point arithmetic where all of the same factors must be taken into account, but differently.

Bernie

Yes, you can say think of it as being a rounding problem. Though it's a rounding problem that is forced due to math computations that do not produce answers that are accurate to some pre-determined number of decimal places.

You can see how the problem occurs by using your numbers (though I don't know of any situation where the price of a security is quoted to six decimal places).

You received a dividend of $18.70 and that $18.70 was used to buy shares of a security that were priced at $64.343802/share. Those were the known values: to determine how many shares you'd get, the following equation was solved:

Amount / Price-per-share = Number-of-shares

or

$18.70 / $64.343.802 = 0.29062628285471847000896838517562

(That answer came from Windows XP Calculator.)

As you can see there are a lot digits to the right of the number of shares you received: those digits were lost because no system is going to carry

But when those digits are lost (in the rounding process), it then becomes impossible to recompute either of the other two factors in the equation.

Normally, if A / B = C then B = A / C

or

if number-of-shares = amount / price-per-share then price-per-share = amount / number-of-shares

If you used the actual numbers, you'd get the "right" answer (after rounding)

$18.70 / 0.29062628285471847000896838517562 64.343802000000000000000000000138

But since the number-of-shares you actually received was rounded (losing at least 26 digits in the process), you get

$18.70 / .290626 = 64.343864623261511

or 64.343865 after rounding.

Once you round, you can not accurately recompute any of the factors in the original equation.

Luckily, the price/share that was used to determine the number of shares you would receive is not material, and in fact, since the number of shares was rounded, the price/share that Quicken computed is the actual price/share that you paid.