Question

Your investments took a 7% plunge (drop) then increased by 8%. Are you ahead by 1%? Explain.

Answer 1

Answer:

If your investment dropped 7% and then increased by 8% you will not be a percent ahead. The reason being is that the increase is a lower amount and the decrease was on a larger amount.

For example, if you have $100 invested. 100*.07=$7, 100-7=$93 remaining. 93*08= $7.44. 93+7.44=100.44 (a .44 increase from the original number). One percent increase from the original number would have $101.