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18 Jun 2006, 17:43
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An investor purchased a bond for p dollars on Monday. For a certain number of days, the value of the bond increased by r percent per day. After this period of constant increase, the bond decreased the next day by q dollars and the investor decided to sell the bond that day for v dollars. When did the investor sell the bond if r = 100{[(v+q)/p]^1/2 - 1} ?
Wednesday of the same week.
Thursday of the same week.
Friday of the same week.
Monday of the next week.
Tuesday of the next week.
ANY IDEAS??!
Wednesday of the same week.
Thursday of the same week.
Friday of the same week.
Monday of the next week.
Tuesday of the next week.
ANY IDEAS??!
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18 Jun 2006, 20:00
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shehreenquayyum
initial price = p
price before decrease by q = p (1+r)^n
v = p (1+r)^n - q
v + q = p (1+r)^n
r = 100 {(v+q)/p)^1/2 - 1}
r = 100 [{p (1+r)^n /p}^1/2 - 1]
r = 100 [{(1+r)^n}^1/2 - 1]
now n should be 2. if n is 2 then, he sold the bond on Thursday of the same week.
18 Jun 2006, 20:11
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Increment is compounded because the increment each day is based on the increased rate from the previous day.
So
v = p(1 + r/100)^n - q where n is number of days (n is 1 day before q dollars drop)
{100[(v+q)/p - 1]}^ 1/n = r
We know n = 2, so he must have sold on Thursday because the drop only comes in n+1 days.
So
v = p(1 + r/100)^n - q where n is number of days (n is 1 day before q dollars drop)
{100[(v+q)/p - 1]}^ 1/n = r
We know n = 2, so he must have sold on Thursday because the drop only comes in n+1 days.
