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I'm doing a math problem, and it says: "A certain stock begins the week trading at 87.5 per share. If the average gain for the next four days is 0.5, by how much should the price of the stock increase during Friday so that the total gain for the stock during the entire five days is 5 percent?"

According to the explanation given by the book I'm using, a gain of 0.5 is a gain of 2. How did they get that?

2007-04-07 06:59:32 · 3 answers · asked by Anonymous in Business & Finance Investing

3 answers

The stock starts at 87.5.
Then it goes up for 4 days at an average of 0.5 per day.
That means that in 4 days it went up by 2 points.
(= 4 days x 0.5 points/day)
This equals 89.5
They are asking what does 89.5 have to gain in order to equal 5% more than 87.5 (starting price)
This is 91.875
So the difference is the gain required 91.875 - 89.5
= 2.375

2007-04-07 07:10:57 · answer #1 · answered by ignoramus 7 · 0 0

The stock begins the week priced at 87.5. For the next four days it averages a gain of 0.5 per day. That means that at the end of four days it gained 2 points.

Second part 5 percent gain for the week would be a gain for the week of 0.05 X 87.5 = 4.37 Since it already gained 2 points it will need another 2.37 for Friday to earn 5% for the week.

2007-04-07 07:15:06 · answer #2 · answered by Dr. D 7 · 0 0

Suppose a stock at the end of yesterday was $10 has gone up to $15 today, then the said stock has gone up by one-halfor 50%

2007-04-07 20:38:04 · answer #3 · answered by Santosh 3 · 0 0

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