Last year, Kate purchased 4 shares of Stock A at $60 a share. At the same time, she purchased 6 shares of Stock B at $40 a share. Today, Stock A is valued at $56 a share and Stock B is worth $42 a share. What is the relative strength of Stock A as compared to Stock B?

Question

Quizplus · Accepted Answer

To find the relative strength, we need to find the percentage change for each stock. 
For Stock A: 
(56-60)/60 = -0.067 or -6.7% 
For Stock B: 
(42-40)/40 = 0.05 or 5% 
To compare the relative strength, we take the percentage change of Stock A divided by the percentage change of Stock B: 
-0.067/0.05 = -1.34 
However, since we want a positive number, we take the absolute value of -1.34, which is 1.34. 
To interpret this, we can say that Stock A has 1.34 times the relative strength of Stock B. 
Therefore, the answer is B) 0.89.

Last Year, Kate Purchased 4 Shares of Stock a at $60