Name: ______________________ Date: __________ Partner (Part C): ______________________
The formula
Percent return = (ending value minus starting value) divided by starting value, times 100.
As a picture: a fraction with "ending minus starting" on top and "starting" on the bottom, then "times 100" beside it. (The slide shows it drawn large with STARTING in bold.)
The bottom of the fraction is always the starting value. If you divide by the ending value, you get the wrong answer every time.
A loss gets a minus sign. A gain gets a plus sign.
Worked example. An investor started with $1,000 in 1870 and has $850 now.
- Ending minus starting: 850 minus 1,000 = minus 150
- Divided by starting: minus 150 divided by 1,000 = minus 0.15
- Times 100: minus 15 percent
The investor's return is minus 15 percent.
Part A: Practice (alone)
Show the subtraction line and the division line for each one. Every price is from the board.
| # | Starting value | Ending value | Ending minus starting | Divided by starting | Percent return |
|---|---|---|---|---|---|
| 1 | $1,000 (a ledger in 1870) | $1,250 | ______ percent | ||
| 2 | $1,000 (a ledger in 1870) | $850 | ______ percent | ||
| 3 | $50 (one share of RAIL in 1870) | $30 (1873, the Panic) | ______ percent | ||
| 4 | $60 (one share of OIL in 1911) | $70 (1928) | ______ percent |
Grade 6 support rows (round numbers):
| # | Starting value | Ending value | Ending minus starting | Divided by starting | Percent return |
|---|---|---|---|---|---|
| 5 | $100 | $120 | ______ percent | ||
| 6 | $100 | $75 | ______ percent |
- The trick question. GAS was $40 in 1928 (the peak) and $20 in 1932 (the bottom).
- The drop, as a percent of the peak: (20 minus 40) divided by 40, times 100 = ______ percent
- The climb back, as a percent of the bottom: (40 minus 20) divided by 20, times 100 = ______ percent
- Why are the two percents different when the dollar change ($20) is the same both ways? Answer: ______________________________________________________________________
Part B: My own return (alone, from your own ledger)
My starting value, 1870: $1,000
My total right now, at Round 8 (1932) prices: $__________
Ending minus starting: __________
Divided by starting: __________
Times 100: my percent return so far is __________ percent (circle: gain / loss)
Check it on the calculator: __________ Same? yes / no
The company that hurt me most from the peak to the bottom. From your price table: the Round 6 price (1928, the peak) and the Round 8 price (1932, the bottom).
Ticker: ______ 1928 price: $______ 1932 price: $______
(1932 minus 1928) divided by 1928, times 100 = ______ percent
Part C: A safe ledger, a one-company ledger and a mixed ledger over the same rounds (pairs)
Three investors started in 1870 with $1,000, like you, and never traded again. The values below are their totals in three rounds: the peak (Round 6, 1928), the crash (Round 7, October 1929), and the bottom (Round 8, 1932, today). Every value is built from the board's prices and the bank's 3 percent; the teacher key shows how.
- Safe: all $1,000 in the bank.
- One company: 20 shares of RAIL at $50 ($1,000), nothing else.
- Mixed: 5 RAIL at $50 ($250), 25 OIL at $10 ($250), 12 GAS at $20 ($240), and $260 in the bank.
| Ledger | Value at the peak (1928) | Return at the peak | Value in the crash (1929) | Return in the crash | Value at the bottom (1932, today) | Return today |
|---|---|---|---|---|---|---|
| Safe | $1,195 | plus 19.5 percent (done for you) | $1,231 | plus 23.1 percent (done for you) | $1,268 | plus 26.8 percent (done for you) |
| One company | $1,400 | ______ percent | $900 | ______ percent | $200 | ______ percent |
| Mixed | $2,891 | ______ percent | $2,179 | ______ percent | $1,245 | ______ percent |
The Safe row is worked for you as a model. Compute the other six. Round to one decimal place.
- Which ledger looked smartest (a) at the peak, (b) in the crash, and (c) today?
(a) ____________________ (b) ____________________ (c) ____________________
- Which ledger would you rather have held for these 62 years? Circle one. Then say what it is better for (money for college in ten years, or rent next month) and give a number.
Safe / One company / Mixed. Because: ______________________________________________________________________
More room: ______________________________________________________________________
- Grade 8 stretch. The one-company ledger's fall from the peak to the bottom, as a percent of the peak: (200 minus 1,400) divided by 1,400, times 100 = ______ percent. To get back from $200 to $1,400 it must climb: (1,400 minus 200) divided by 200, times 100 = ______ percent. Explain in one sentence why a ledger that fell 86 percent has to climb 600 percent to get back.
My sentence: ______________________________________________________________________