Suppose that a stock’s price is $48 at the end of Day 1. If the price of the stock increases by 30% during Day 2, 20% during Day 3 and then decreases by 5% during Day 4, what is the total percentage change in the stock price during these 3 days?

Tutors, sign in to answer this question.

Marked as Best Answer

FIRST OFF --> PERCENT CHANGE IS THE NEW PRICE MINUS THE OLD PRICE DIVIDED BY THE OLD PRICE. THE OLD PRICE FROM DAY 1 WAS $48, WE NEED TO FIND OUT THE NEW PRICE.....

DAY 1 48

DAY 2 IS AN INCREASE OF 30%, EASIEST WAY TO DO THAT IS 1.3 X 48 = 62.4

DAY 3 IS AN DECREASE BY 5% ... SO 62.4 (FROM THE DAY BEFORE) X .95 62.4 X .95 = 59.28

SO 59.28 IS OUR NEW PRICE.

% CHANGE IS (NEW-OLD)/OLD OR (59.28 -48)/48 = .235 OR 23.5%

.......

HOW DID I GET THE AMOUNTS FOR EACH DAY?????

TO INCREASE OR DECREASE AN AMOUNT BY A GIVEN PERCENT

TAKE THE AMOUNT THAT YOU HAVE AND TIMES IT BY 1 PLUS THE PERCENT AS A DECIMAL....

SO LETS DO ANOTHER EXAMPLE

A GIRL MAKES $30 AN HOUR, BUT IS GETTING A 10% RAISE.....

SO DO 30 X 1.1 (1.1 BC 10% IS .10...1+.10 IS 1.1) = $33 SINCE SHES GETTING MORE MONEY YOU ADD THE .10

OR

A GIRL BUYS A CAR FOR $2500, AS SOON AS SHE DRIVES IT OFF THE LOT IT LOSES 15% OF ITS VALUE...

SO DO $2500 X .85 (1 - .15) = 2125

HOPE THAT HELPS

Since you're looking for the percentage increase, the stock price is irrelevant. We just need to focus on the percent changes each day.

A 30% change, as seen from Day 1 to Day 2, can be calculated by multiplying the initial price by 1.3. (As you may recall, 30% can be displayed in decimal form as 0.3, and 1 + 0.3 = 1.3)

For the second increase, mutliply by 1.2 for a 20% change.

For the third, we multiple by 0.95 (a 5% decrease is the same as 1 - 0.05 which equals 0.95). You'll notice that all the increases are calculated by calculating a number higher than 1, and a decrease is calculated by multiplying by a number less than 1.

To get the total change, we simoly multiply all three factors together.

1.3 * 1.2 * 0.95 = 1.482, or a 48.2% change.

Already have an account? Log in

By signing up, I agree to Wyzant’s terms of use and privacy policy.

Or

To present the tutors that are the best fit for you, we’ll need your ZIP code.

Your Facebook email address is associated with a Wyzant tutor account. Please use a different email address to create a new student account.

Good news! It looks like you already have an account registered with the email address **you provided**.

It looks like this is your first time here. Welcome!

To present the tutors that are the best fit for you, we’ll need your ZIP code.

Please try again, our system had a problem processing your request.

Bonnie A.

UMUC Grad to help with Math, Science and Social or Business Sciences.

$7.50 per 15 min

View Profile >

Ali A.

MBA for Math, Stats, Physics, Business, Finance, VB/VBA Tutoring

$12.25 per 15 min

View Profile >

Maurizio T.

Statistics Ph.D and CFA charterholder with a true passion to teach.

$12.50 per 15 min

View Profile >