Question
A man owns stock valued at
back the next day. How much money is the stock valued at the end of the second day?
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back the next day. How much money is the stock valued at the end of the second day?
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Ask by Wade Cruz. in the United States
Mar 29,2025
Upstudy AI Solution
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Answer
After the stock drops by 7% and then gains 7% back, it is valued at approximately $2786.28 at the end of the second day.
Solution
-
Initially, the stock is valued at
. -
On the first day, the stock drops by
. This means the new value is So, after the drop, the stock is worth. -
On the second day, the stock increases by
. The value after this gain is -
Multiplying, we have
-
Therefore, the stock is worth approximately
at the end of the second day.
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Simplify this solution The Deep Dive
When the stock drops by
Surprisingly, even though the stock returned to a similar percentage increase, it did not return to its original value. This phenomenon illustrates how percentage changes can lead to differing outcomes, a fact that’s crucial for investors to understand when dealing with stock market fluctuations.
To avoid confusion with percentage changes, remember that the base amount changes after each fluctuation. A common mistake is to assume that if something loses and then gains the same percentage, it will end up being the same as before. Using specific numbers while calculating can clarify the situation while avoiding misinterpretation of gains and losses!
