/*! This file is auto-generated */ .wp-block-button__link{color:#fff;background-color:#32373c;border-radius:9999px;box-shadow:none;text-decoration:none;padding:calc(.667em + 2px) calc(1.333em + 2px);font-size:1.125em}.wp-block-file__button{background:#32373c;color:#fff;text-decoration:none} Problem 11 On April \(25,\) Berkshire Hatha... [FREE SOLUTION] | 91影视

91影视

On April \(25,\) Berkshire Hathaway Inc closed at \(\$ 126,875\) per share. One year earlier, one share closed at \(\$ 108,750 .\) What was an approximate one- year percent change?

Short Answer

Expert verified
The approximate one-year percent change in the stock price of Berkshire Hathaway Inc. is calculated by the formula, and the result is the change in percentage. Perform all the mathematical operations to reach the final answer.

Step by step solution

01

Identify the initial and final values

The initial value is the stock price one year earlier, which is \$108,750. The final value is the stock price on April 25, which is \$126,875.
02

Apply the percent change formula

The formula for percent change is: \[\text{{Percent Change}} = \frac{{\text{{Final value}} - \text{{Initial value}}}}{{\text{{Initial value}}}} \times 100\]Plug the initial and final values into the formula: \[\text{{Percent Change}} = \frac{{\$126,875 - \$108,750}}{{\$108,750}} \times 100\]
03

Simplify to find the percent change

Solve the subtraction in the numerator, then divide the result by the initial value and multiply by 100:\[\text{{Percent Change}} = \frac{{\$18,125}}{{\$108,750}} \times 100\]Continue to simplify to get the approximate one-year percent change.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Stock Price Comparison
When comparing stock prices from different times, like Berkshire Hathaway Inc's prices on April 25 of two consecutive years, it provides vital data for understanding trends. Such comparisons can help investors evaluate whether a stock's value has increased or decreased over time.
Performing a stock price comparison requires two key figures: the initial and the final stock prices over a set period, such as one year.
In our example, the initial price was \(\\(108,750\) and the final was \(\\)126,875\).
By using these values, you can calculate not only the difference in price but also understand whether an investment in this stock would have been profitable.
  • A stock price increase is typically a positive sign, indicating growing investor confidence or improving company performance.
  • A decrease might raise questions about the company's market position or external factors affecting its industry.
This simple comparison can be foundational before moving on to more complex analysis.
Financial Algebra
Financial algebra is a field where mathematical techniques meet finance-related problems, often using formulas to solve practical questions like percent changes in stock prices.
By utilizing equations, investors can quantify changes and assess potential strategies.
In our example, we use the percent change formula: \[\text{Percent Change} = \frac{\text{Final value} - \text{Initial value}}{\text{Initial value}} \times 100\]
This formula is a staple in financial algebra. It calculates how much a value has increased or decreased in percentage terms.
  • Start by identifying the initial and final values. This is crucial for setting up your calculations correctly.
  • Subtract the initial value from the final value; this tells you how much the stock price has changed in monetary terms.
  • Divide this change by the initial price to find the rate of change.
By multiplying by 100, the final step converts the rate into a percentage, making it easier to interpret.
Investment Analysis
Investment analysis involves assessing various investment possibilities to achieve desired financial goals. It includes looking at stock price changes over time to understand potential returns.
When analyzing investments, one might ask, "Is a 16.67% increase in the Berkshire Hathaway stock price a good return?"
Factors considered in such analyses include:
  • Historical performance: Examines past price changes to predict future trends.
  • Risk assessment: Determines potential risk versus return.
  • Market conditions: Considers broader economic indicators and forecasts.
Effective investment analysis involves a balanced evaluation of statistical data, market trends, and the investor's personal risk tolerance.
This allows individuals to make informed decisions about buying, holding, or selling stocks.
The calculated percent change of about 16.67% would generally be seen as positive, indicating possible profitability for those who invested at the initial point.

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Kristy owns 200 shares of Nortel stock. On November 30 the company instituted a 1 -for-10 reverse split. The pre-split price per share was \(\$ 2.15\) . The number of shares outstanding before the split was 4.34 \(\mathrm{B}\) . a. How many shares did Kristy hold after the split? b. What was the post-split price per share? c. What was the post-split number of outstanding shares? d. What was the post-split market cap?

Isaac follows the market action of Google Inc. He has watched the prices for two consecutive days. The information he collected is given in the table. Do the June 7 numbers reflect a positive or negative money flow? Explain. $$\begin{array}{|c|c|c|c|c|}\hline \text { Date } & {\text { High }} & {\text { Low}} & {\text { Close }} & {\text { Volume }} \\ \hline 7 \text { -June } & {584.68} & {578.32} & {580} & {4,974,100} \\ \hline{6\text { -June }} & {582.95} & {575.60} & {581} & {4,342,700} \\ \hline \end{array}$$

For Exercises \(12-15\) , round answers to the nearest tenth of a percent. The Zeescore Corporation pays an annual dividend of \(\$ 2\) per share. On wednesday it closed at \(\$ 61\) per share with a net change of \(-0.85 .\) The dividend remained at \(\$ 2\) for a year. a. What was the yield on Wednesday? b. At what price did Zeescore close on Tuesday? c. What was the yield on Tuesday? d. Tuesday鈥檚 net change was ?1.96. At what price did Zeescore close on Monday? e. What was Monday鈥檚 yield? f. Look at the yields for Monday, Tuesday, and Wednesday. They are increasing. Explain why this increase is not 鈥済ood news鈥 to the investor who owns stock in Zeescore.

In 2004 , Joe bought 200 shares in the Nikon corporation for \(\$ 12.25\) per share. In 2007 he sold the shares for \(\$ 31.27\) each. a. What was Joe's capital gain? b. Express Joe's capital gain as a percent, rounded to the nearest percent.

Use the following ticker to answer Exercises 10鈥17. The stock symbols represent the following corporations: PG, Procter & Gamble Co; BAC, Bank of America Corp; DIS, Walt Disney Co; and K, Kellogg Co. PG 4.5K@66.75?0.39 BAC 0.65M@36.17?0.54 DIS 2.55K @34.90?1.08 K 0.76K@51.49?0.04 Sarah sold her Disney shares as indicated on the ticker. a. How many shares did she sell? b. How much did each share sell for? c. What was the total value of all the shares Sarah sold? d. Suppose that the next DIS trade that comes across the ticker represents a sale of 7,600 shares at a price that is $0.98 higher than the last transaction. What will Sarah see scrolling across her screen for this transaction of DIS?

See all solutions

Recommended explanations on Math Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.