You decide you will buy a stock only if it shows an overall increase over the next 30 days. The first 10 days, it has an average daily increase of $0.30. The next10 days, it has an average daily decrease of $0.45. The last 10 days, it has an average daily increase of $0.25.
a. How much did the stock change over the first 10 days? Show your work.
b. How much did the stock change over the next 10 days? Show your work.
c. How much did the stock change over the last 10 days? Show your work.
d. How much did the stock change altogether?
e. Should you buy the stock?
I'll do (a) and it should help you with the other parts. If you get stuck, come back and show how far you got.
The first 10 days, it has an average daily increase of $0.30.
10 days @ 0.30/day = 10*0.30 = +3.00
To answer these questions, we need to calculate the changes in stock price for each period and then analyze the overall change. Let's break it down step by step:
a. To calculate the change over the first 10 days, we need to multiply the average daily increase by the number of days:
Change = Average Daily Increase * Number of Days
Change = $0.30 * 10
Change = $3.00
Therefore, over the first 10 days, the stock increased by $3.00.
b. To calculate the change over the next 10 days, we need to multiply the average daily decrease by the number of days:
Change = Average Daily Decrease * Number of Days
Change = -$0.45 * 10
Change = -$4.50
Therefore, over the next 10 days, the stock decreased by $4.50.
c. To calculate the change over the last 10 days, we need to multiply the average daily increase by the number of days:
Change = Average Daily Increase * Number of Days
Change = $0.25 * 10
Change = $2.50
Therefore, over the last 10 days, the stock increased by $2.50.
d. To calculate the overall change, we need to sum the changes from each period:
Overall Change = Change in first 10 days + Change in next 10 days + Change in last 10 days
Overall Change = $3.00 + (-$4.50) + $2.50
Overall Change = $1.00
Therefore, overall, the stock changed by $1.00.
e. Finally, based on your decision criteria, the stock initially increased, then decreased, and finally increased again. As the overall change is positive ($1.00), we can conclude that the stock showed an overall increase over the 30 day period. Therefore, you should buy the stock according to your stated condition.