All AnswersHey, I got confused trying to solve this question. Can anyone explain it?
A. $3.00
B. $9.00
C. $19.00
D. $24.00
E. $29.00
Asked by M Rizwan 4 months ago
Detail-Oriented Financial Analyst
This one’s all about understanding what “less than 50% change” actually means. The 10 dollars on Day 2 came after the price changed by under 50% from Day 1 — not the other way around.
So if 10 = P(1 + n), and n is between –0.5 and +0.5, that means P had to be somewhere between:
10 / 1.5 ≈ 6.67 (if price increased 50%)
and
10 / 0.5 = 20 (if price dropped 50%)
Now, on the last day, the price could again change by less than 50% from that Day 1 price. So take those same limits:
Min closing price = 6.67 × 0.5 ≈ 3.34
Max = 20 × 1.5 = 30
That means the last-day price has to be between 3.34 and 30. Only option A ($3.00) falls outside that range. That’s the one that can’t be the closing price.
Seo Executive
This one’s tricky because it feels like the 50% change is from Day 2 — but it’s actually always relative to Day 1.
• Start by letting P be the Day 1 price
• Since Day 2 price is $10, and price changed by <50%, that means:
P = 10 / (1 + n), where n is between –0.5 and 0.5
• So P is between 6.67 and 20
Now, on the last day, the price could have dropped 50% from 6.67 (the lowest possible P) → 3.34
Or gone up 50% from 20 → 30
That makes the valid range 3.34 to 30
Only option outside that is $3.00 — so that one can’t be correct. Answer is A.