Question

The price of a particular stock is plotted against time in a graph. If the overall shape of the graph has a negative slope, would you invest your money in this stock? Explain why or why not.

Answer 1

No because it has a negative slope

Answer 2

Answer: No, we will not invest money in this stock.

Step-by-step explanation: In the attached figure , the price p of the stock  (Y-axis) is plotted against time t (X-axis). Let P(a,b) and Q(c,d) be any two points on the graph. Since the slope m is negative, so, we have

$m< 0\\\Rightarrow m< \dfrac{d-b}{c-a}$

Since $c> a$, so, we must have

$d-b< 0\\\Rightarrow d< b.$

This implies that, as the time increases, the price of the stock decreases. Hence, it will be a loss investing money in this stock.

Thus, we will not invest money in the stock because there will be loss.