Practice Test
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Stock B
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We want to describe the changes in the price of each stock. To do so, let's analyze each line one at time.
The first line segment tells us that the price increases at a constant rate. The price then stays the same for a certain amount of time. After that, the price decreases at a constant rate until it reaches another constant value for the rest of the day.
At the beginning of the day, the price decreases at a constant rate and then becomes constant for some time. After that, the price starts to increase until it reaches a constant value for the rest of the day.
Notice that the Stock B line is above that the line of Stock A at the end of the day. Since the vertical axis indicates the price, this means that Stock B has the greater price at the end of the day.
As we can see in the given graph, the price of each stock changes a lot during the day.
To explain the price of Stock B, let's say that Stock B represents a sportswear company. The owner of the company announces that its clothes will only come in neutral colors. This angers color lovers, and the company lost colIVfollowers. As a result, the stock price dropped considerably until it remained constant.
The price of Stock B decreases because the number of buyers was lower. After that, the price is constant because the brand's fans kept buying to help company. Towards the end of the day, the owner makes an announcement that the colorful clothes are coming back. Then, the price increases until it reaches a constant price again.
This means that there is a increase of buyers until they have the same buyers as the beginning of the day, and the stock value returns to its original price. Be aware that this is only one example — there are many other possible explanations for the change in the price of the stock.