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:______A) A = B = CB) A = B < CC) C < B = AD) A < B < CE) B < A < C

Answer 1

E) B < A < C

Explanation:

Penni Precisely buys 100 worth of stock in each of three companies: Alabama Almonds, Boston Beans, and California Cauliflower.

Initial Values are: A, B and C

After one year, A was up 20%, B was down 25%, and C was unchanged.

Values after one year:

• A=(100%+20%) of $100=$120 worth of stock.
• B=(100-25%) of $100=$75 worth of stock.

• C=100% of $100=$100 worth of stock.

For the second year, A was down 20% from the previous year, B was up 25% from the previous year, and C was unchanged.

Values after the second year

• A=(100%-20%) of $120 =80% of $120=$96 worth of stock.
• B=(100%+25%) of $75 =125% of $75=$93.75 worth of stock.
• C=100% of $100 =$100 worth of stock.

Therefore, from the final values of the stock, we have that:

B<A<C

The correct option is E.