Question

During the past several years, we experienced significant turmoil of our financial market. Dow Jones Industrial Average index (DJIA), for example, has shown its records on a roller coaster as follows:

                              Date                     DJIA (imaginary index; these are not true at all)

               1.            Oct. 12, 2014      11,000

               2.            Oct. 10, 2015      11,100

               3.            Oct. 16, 2016      13,300

               4.            Oct. 14, 2017      15,000

               5.            Oct. 07, 2018      16,500

               6.            Oct. 03, 2019      26,500

1 You made an investment of $20,000 into the DJIA on October 12, 2014. You had been keeping it all without any changes. How much was it worth on Oct. 03, 2019? Round your answer to the nearest dollar.  

2 On Oct. 16, 2016, you invested additional $10,000 into the DJIA thinking that it would rise higher. How much was the additional (=new) investment worth on Oct. 3, 2019?

3 Determine the growth rate (in %) of the DJIA during the entire period (from Oct. 12, 2014 to Oct. 3, 2019)  

Answer 1

Investment made in Oct 12,2014 = 20000

Given index on Oct 12,2014 is = 11000

Given index on Oct 03,2019 is = 26500

Worth of investment 20000 on Oct 03,2019 is =

  20000X26500/11000

= 48182

If we gone on percentage bases

Incremental in investment (%) = (26500-11000)/11000X100

= 140%

Growth in investment = 20000 + 20000X140%

= 48000

Growth in additional investment on Oct 16,2016

Index value on Oct 16,2016. = 13300

Index value on Oct 3, 2019. = 26500

Value of investment on Oct 3,2019 = 10000X26500/13300

= 19925

If we go on percentage bases

Incremental in investment (%) = (26500-13300)/13300X100

= 99%

Incremental in investment value = 10000 + 10000X99%

= 19900

Actual percentages are 140.909%,99.24% its was round of to 140%,99%

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