Question

Lines can be used to approximate a wide variety of functions; often a function can be described using many lines. If a stock price goes from $10 to $12 from January 1st to January 31, and from $12 to $9 from February 1st to February 28th, is the price change from $10 to $9 a straight line? How can I use two “pieces” of lines to describe the price movements from the beginning of January to the end of February?

Answer 1

We are given: Price of stock on 1st January = $10.

And price of stock on 31st january = $12.

Let us represent Day number and Price by coordinate (x,y).

Therefore, coordinates for January month can be written as (1,10) and (31,12).

Price of stock on 1st February = $10.

And price of stock on 28th February = $9.

Let us represent Day number and Price by coordinate (x,y).

Therefore, coordinates for February month can be written as (1,12) and (28,9).

Now, we can plot those two different pairs of coordinates for January and February on the graph.

From the graph, we can see that slope of red line is greater and it is positive and slope of green line is negative(because price decreasing).

Therefore, the price change from $10 to $9 is not a straight line.

Therefore, we can say from January 1 to January 31 the rate is inceasing so the slope is positive then after 1 February the rate started decreasing so the slope became negative.