At the start of trading on a particular day, the price of stock x is $5. If during the day the price falls to $4 by what percent does the price of the stock decrease?
A. 8%
B. 12.5%
C. 14%
D. 16%
E. 20%
The OA is option E.
How can I calculate the percent decrease?
At the start of trading on a particular . . .
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Hi Vincen,
We're told that at the start of trading on a particular day, the price of Stock X is $5 and that during the day the price falls to $4. We're asked by what percent does the price of the stock decrease. This question requires the use of the Percent Change Formula:
Percent Change = (New - Old)/(Old) = (Difference)/(Original)
The New number is 4 and the Old/Original number is 5, so we have (4 - 5)/5 = -1/5 = 20% decrease
Final Answer: E
GMAT assassins aren't born, they're made,
Rich
We're told that at the start of trading on a particular day, the price of Stock X is $5 and that during the day the price falls to $4. We're asked by what percent does the price of the stock decrease. This question requires the use of the Percent Change Formula:
Percent Change = (New - Old)/(Old) = (Difference)/(Original)
The New number is 4 and the Old/Original number is 5, so we have (4 - 5)/5 = -1/5 = 20% decrease
Final Answer: E
GMAT assassins aren't born, they're made,
Rich
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Vincen wrote:At the start of trading on a particular day, the price of stock x is $5. If during the day the price falls to $4 by what percent does the price of the stock decrease?
A. 8%
B. 12.5%
C. 14%
D. 16%
E. 20%
The OA is option E.
How can I calculate the percent decrease?
We can create the following equation in which n = the percentage decrease:
5(1 - n/100) = 4
5(100 - n)/100 = 4
500 - 5n = 400
5n = 100
n = 100/5 = 20
Alternate Solution:
Let's use the percent change formula, which states: % change = [(Final Value - Original Value) / Original Value] x 100%. For this problem, the original value is 5 and the final value is 4.
% change = [(4 - 5) / 5] x 100%
% change = -1/5 x 100%
% change = -0.2 x 100%
% change = -20%
The negative value indicates a percentage decrease, so we have a 20% decrease in the price of the stock.
Answer: E
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