Question

The value of your stock investment decreased by 42% after a stock market crash. What percentage increase in value would the stocks have to rise in oder to return to the value they were before the stock market crash? round your answer to the nearest tenth of a percent.

Answer 1

After the stock crash, we would have 100 - 42 = 58% of the initial amount.

To rise it in order to return to the amount before the crash, we would need a recovery rate r such as:

`0.58\cdot(1+r)=1`

Then we have:

`\begin{gathered} 1+r=(1)/(0.58) \\ 1+r=1.724 \\ r=0.724=\text{ 72.4\%} \end{gathered}`