Statistics, Data, and Probability I: Drill Set 2, Problem 2. If this trend continues, what will be the price in week 7?
|CAHSEE Math||Statistics, Data, and Probability I|
|Functions||Interpret expressions for functions|
|Statistics||Charts, Graphs, and Tables|
|Statistics and Probability||Interpret linear models|
|Statistics, Data Analysis, and Probability 6||Data sets|
Uh, no... this table. Right. Whenever we are asked to make predictions,
it is likely that we are being asked to find a PATTERN.
And in this case, they give us the pattern -- it's that the share price increased each week.
So our first thought, especially for you future stock brokers or investors out there,
should be "by how much did it increase?"
That is, the problem GIVES us that the stock
INCREASED. So let's first just figure out what it increased in week one.
We take $14.40 and subtract $12.15. We get two bucks and two bits.
Or... a fancy way of saying... two bucks and a quarter.
Let's do it for week 2 now and we get $16.65
minus $14.40 and yeah -- that's $2.25. Great.
Since the stock increased by the SAME amount, we know we have a CONSTANT trend.
If the stock had gone to any other number,
the answer would have been much harder to figure out.
But the question is asking us to carry this pattern out to the 7th iteration.
We are already at week 4 with a stock trading at $18.90 a share.
Now we get 3 more weeks of wealth creation.
We can spend some of that dough on Shmoop you know!
Always a wonderful gift for the little brother....
We can get there in 2 ways, the easiest of which is to just multiply $2.25 by 3...
...because there are 3 weeks to go from week 4 to week 7... and we get $6.75.
We'd add that to the last trade of $18.90 and get $25.65.
Yep, it's there on the answer choice menu as C.
If you are allergic to multiplication you could have just iterated 3 times and had:
Week 5... $18.90 + $2.25 Week 6... $21.15 + $2.25
And Week 7... $23.40 + $2.25 gets you $25.65
Either way, you arrive at the promised land of high investment returns, wealth, luxury...
...and the answer being C.