If a stock gains 50 percent one year and loses 50 percent of its value the next year, is it accurate to say that its mean growth over the full two-year period was (50 + -50)/2 = 0%?

Question

anonymous · Answer

no

anonymous · Answer

suppose it is worth $100 and increases by 50%
what is it worth now?`

anonymous · Answer

@satellite73 200?

anonymous · Answer

no that is a 100% increase
what is 50% of 100?

anonymous · Answer

@satellite73 50? So would you add 50 to 100 and the total would be 150?

anonymous · Answer

yes

misty1212 · Answer

HI!!

misty1212 · Answer

if it is now worth $150 and decreases by 50% which is by half, what is it worth now?

anonymous · Answer

@misty1212 75?

anonymous · Answer

yup

anonymous · Answer

so it is not 0 as an average, it has lost 25% of its value

anonymous · Answer

the math teacher way is $$1.50\times .50=0.75$$

anonymous · Answer

so it has 75% of its initial value

misty1212 · Answer

which is the same as saying it lost 25%!

anonymous · Answer

@misty1212 @satellite73 Awesome!! Thank you so much. That makes much more sense. I appreciate it

anonymous · Answer

yw

misty1212 · Answer

$$\color\magenta\heartsuit$$

misty1212 · Answer

nice video btw