Comprehension
These questions are based on the Price Fluctuations of 4 commodities– arhar, pepper, sugar and gold during February– July 1999 as described below:
Question: 1
Price change of a commodity is defined as the absolute difference in ending and beginning prices expressed as a percentage of the beginning. What is the commodity with the highest price change?
Price change of a commodity is defined as the absolute difference in ending and beginning prices expressed as a percentage of the beginning. What is the commodity with the highest price change?
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In price change calculations, always track the highest and lowest values on the graph to determine the maximum price difference.
Updated On: Aug 5, 2025
- Arhar
- Pepper
- Sugar
- Gold
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The Correct Option is B
Solution and Explanation
From the graphs, the price change for each commodity can be calculated using the formula:
\[
\text{Price Change} = \frac{\text{Ending Price} - \text{Beginning Price}}{\text{Beginning Price}} \times 100
\]
By examining the price fluctuations, we can see that pepper experienced the highest price variation. Therefore, the Correct Answer is (2) Pepper.
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Question: 2
Price Volatility (PV) of a commodity is defined as follows:
\[
PV = \frac{\text{Highest Price during the Period} - \text{Lowest Price during the Period}}{\text{Average Price during the Period}}
\]
What is the commodity with the lowest price volatility?
Price Volatility (PV) of a commodity is defined as follows:
\[
PV = \frac{\text{Highest Price during the Period} - \text{Lowest Price during the Period}}{\text{Average Price during the Period}}
\]
What is the commodity with the lowest price volatility?
Show Hint
In volatility calculations, look for commodities with a smaller range between the highest and lowest prices to identify the lowest price volatility.
Updated On: Aug 5, 2025
- Arhar
- Pepper
- Sugar
- Gold
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The Correct Option is A
Solution and Explanation
To calculate price volatility, we examine the price fluctuations for each commodity. Arhar shows the least variation between its highest and lowest prices, resulting in the lowest volatility compared to other commodities. Therefore, the Correct Answer is (1) Arhar.
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Question: 3
Mr. X, a funds manager, with an investment company invested 25% of his funds in each of the four commodities at the beginning of the period. He sold the commodities at the end of the period. His investments in the commodities resulted in:
Mr. X, a funds manager, with an investment company invested 25% of his funds in each of the four commodities at the beginning of the period. He sold the commodities at the end of the period. His investments in the commodities resulted in:
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When calculating overall profit or loss, use a weighted average approach based on the percentage of investment in each commodity.
Updated On: Aug 5, 2025
- 17% profit
- 5.5% loss
- No profit no loss
- 4.3% profit
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The Correct Option is D
Solution and Explanation
The profit or loss is calculated based on the weighted average of price changes for all four commodities. By examining the price fluctuations in each commodity, we find that Mr. X experienced a net profit of 4.3% on his total investment. Therefore, the Correct Answer is (4) 4.3% profit.
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Question: 4
The price volatility of the commodity with the highest PV during the February-July period is approximately equal to:
The price volatility of the commodity with the highest PV during the February-July period is approximately equal to:
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Price volatility can be estimated by looking at the highest and lowest points on the graph for each commodity.
Updated On: Aug 5, 2025
- 3%
- 40%
- 20%
- 12%
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The Correct Option is C
Solution and Explanation
To determine the price volatility (PV) for each commodity, we examine the price fluctuations from February to July. By using the formula for PV:
\[
PV = \frac{\text{Highest Price during the Period} - \text{Lowest Price during the Period}}{\text{Average Price during the Period}}
\]
The commodity with the highest price volatility shows a significant fluctuation in prices. Based on the graphs, the commodity with the highest PV is estimated to have a volatility of approximately 20%. Therefore, the Correct Answer is (3) 20%.
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Top Questions on Line Graphs
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