Question

The stock price for KTD was $54.56 in January 2014. In February, the stock had increased by 6%, but in March, the price fell by 6%. What was the price of KTD stock in March 2014?

a. $54.56
b. $51.36
c. $52.60
d. $53.46

Answer 1

The price of KTD stock in March 2014 was $51.36 (Option B)

Step-by-step explanation:

In February, the stock price increased by 6%, and in March, it fell by 6%. To find the price in March, we need to adjust the February price.

Let P be the January price, which is $54.56. In February, the price increased by 6%, so the February price
`(\( P_(Feb) \))` is
`\( P + (0.06 * P) \).`Therefore,
`\( P_(Feb) = 54.56 + (0.06 * 54.56) \).`

Now, in March, the price fell by 6%, so the March price
`(\( P_(Mar) \)) is \( P_(Feb) - (0.06 * P_(Feb)) \)` . Substituting the value of
`\( P_(Feb) \)` , we get
`\( P_(Mar) = P_(Feb) - (0.06 * P_(Feb)) \).`

Let's calculate:

1.
`\( P_(Feb) = 54.56 + (0.06 * 54.56) \)`

2.
`\( P_(Mar) = P_(Feb) - (0.06 * P_(Feb)) \)`

By performing these calculations, we find that
`\( P_(Feb) \approx 54.56 * 1.06 \)` and
`\( P_(Mar) \approx P_(Feb) * 0.94 \)`. Thus,
`\( P_(Mar) \approx 54.56 * 1.06 * 0.94 \).`

After calculating this expression, the value is approximately $51.36, which matches Option B. Therefore, the correct answer is
`\( P_(Mar) = $51.36 \)`, making Option B the correct choice.