Question

Suppose your stock balance increased by 5% during the first half of the year and by 3% during the second half; what was the relative change in your balance at the end of the year?

A. 8%
B. -2%
C. 8.15%
D. $8.15

Answer 1

C: 8.15%

Explanation:

The best way to figure this out in my opinion is using variables.

Let's say stock = x.

During the first half, the stock increased by 5%, which means the new stock is 1.05x.

During the second half, the new stock increased by 3%, which means the new new stock is 1.05 * 1.03 * x = 1.085x.

1.0815x is the same as saying something has increased by 8.15%, which is one of our answers!