Question

Which is better: having a stock that goes up 30% on Wednesday than drops 20% on Thursday, or a stock

Answer 1

Step-by-step explanation:

• If the stock goes up 30%, it's multiplied by $1.3$.

The reason is that  $x + .3 \times x=1.3\times x$

• If the stock goes down 20%, it's multiplied by $0.8$

The reason is that $x - .2 \times x = 0.8 \times x$

• If the stock goes down 30%, it's multiplied by $0.7$

The reason is that $x - .3 \times x = 0.7 \times x$

• If the stock goes up 40%, it's multiplied by $1.4$.

The reason is that  $x + .4 \times x=1.4\times x$

So

If you increase it by 30% and then drop it by 20%, it means you are multiplying it by $1.3$ and then multiplying it by $.8$. In other words:

$1.3 \times 0.8=1.04$

So, the net gain is = .04

Assume the original value = 500

Increase it by 30% and it becomes 650

Decrease 650 by 20% and it becomes 520

So, the net gain = 20

Verification:

$500 \times .04=20$

And

If you drop it by 30% and then increase it by 40%, you are multiplying it by .7 and then multiplying it by 1.4. In other words:

$.7 \times 1.4=0.98$

So, the net loss is = 1 - 0.98 = .02

Assume the original value = 500

Decrease it by 30% and it becomes 350.

increase 350 by 40% and it becomes 490.

So, the net loss is = 10

Verification:

$500 \times .02=10$

Keywords: stock, loss, gain

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