jmc

Question

Penni Precisely buys $100 worth of stock in each of three companies: Alabama Almonds, Boston Beans, and California Cauliflower. After one year, AA was up 20%, BB was down 25%, and CC was unchanged. For the second year, AA was down 20% from the previous year, BB was up 25% from the previous year, and CC was unchanged. If A, B, and C are the final values of the stock, then

Accepted Answer

AA is 100 120% = 100 1.2 = 120 after one year. After the second year, AA is 120 0.8 = 96. BB is 100 75% = 100 0.75 = 75 after one year. After the second year, BB is 75 1.25 = 93.75 CC remains unchanged throughout, and stays at 100. Thus, B < A < C, and the right answer is B<A<C