Problem 54 - Algebra 1: Concepts and Skills

Question

The daily closing prices for a company's stock are given in the table. Find the change in the closing price since the previous day. $$ \begin{array}{|c|c|c|c|c|c|} \hline \text { Date } & {\text { Sept. } 11} & {\text { Sept. } 12} & {\text { Sept. } 13} & {\text { Sept. } 14} & {\text { Sept. } 15} \\ \hline \text { Closing Price } & {101.31} & {103.19} & {105.75} & {104.44} & {102.19} \\ \hline \text { Change } & {} & {?} & {?} & {?} & {?} \\ \hline \end{array} $$

Step-by-Step Solution

Answer

The changes in the stock's closing prices are: Sept. 12: 1.88, Sept. 13: 2.56, Sept. 14: -1.31, Sept. 15: -2.25.

Step 1: Find the Change from Sept. 11 to Sept. 12

To find the change in the closing price from Sept. 11 to Sept. 12, subtract the closing price of Sept. 11 from the closing price of Sept. 12: \(103.19 - 101.31 = 1.88\). This is the change for Sept. 12.

Step 2: Find the Change from Sept. 12 to Sept. 13

Subtract the closing price of Sept. 12 from the closing price of Sept. 13 to get the change for Sept. 13: \(105.75 - 103.19 = 2.56\).

Step 3: Find the Change from Sept. 13 to Sept. 14

Subtract the closing price of Sept. 13 from the closing price of Sept. 14 to get the change for Sept. 14: \(104.44 - 105.75 = -1.31\). Note that the change is negative, indicating a drop in price.

Step 4: Find the Change from Sept. 14 to Sept. 15

Lastly, to find the change for Sept. 15, subtract the closing price of Sept. 14 from the closing price of Sept. 15: \(102.19 - 104.44 = -2.25\)

Step 5: Fill Out the Table

Now the final change values are known, the 'Change' row in the table can be filled out: Sept. 12: 1.88, Sept. 13: 2.56, Sept. 14: -1.31, Sept. 15: -2.25

Key Concepts

Understanding Daily Closing Prices

Every day, the stock market operates within a specific timeframe, and at the end of this period, we record the final trading price of a stock. This is known as the daily closing price.

• It reflects the last price at which a stock traded on that given day.
• Investors use the daily closing prices to evaluate the performance of a stock.
• These prices can vary day-to-day due to market trends and the inherent volatility of stock markets.

By observing the daily closing prices, you can determine how a stock is performing over time. This helps investors make decisions about buying or selling their stocks based on market performance.

Simple Price Calculation Techniques

Calculating the change in stock prices from one day to the next is straightforward. To determine the daily change in closing prices, subtract the previous day's closing price from the current day's closing price:\[\text{Change} = \text{Closing Price on Current Day} - \text{Closing Price on Previous Day}\]

• If the result is positive, the stock has increased in value.
• If the result is negative, the stock has decreased in value.

For example, to find the change from Sept. 11 to Sept. 12, calculate:\[103.19 - 101.31 = 1.88\]This calculation method provides a quick way to analyze stock price movements over consecutive days.

Interpretation of Negative and Positive Changes

After calculating the change in stock prices, it's essential to interpret what these changes mean.Positive changes indicate growth or an increase in stock value. It often reflects confidence among investors and a potentially thriving market position.Negative changes show a decline or decrease in stock value. This does not always signal a problem; it could be due to market correction or external factors impacting the stock momentarily.

• A positive value, like \(+1.88\), shows the stock increased by \(1.88 from the previous day.
• A negative value, like \(-1.31\), indicates a decrease, meaning the stock lost \)1.31 compared to the previous day.

Understanding these concepts allows investors to make informed decisions, helping them to strategize on whether to hold, buy, or sell stocks based on their investment goals.