(Graph Exercise) Enron's terrible tumble.
Position | Calculating stock price and value - Brief Article |
One of the worst cases of corporate fraud in recent times is that of Enron, a Houston-based energy trading corporation that went bankrupt at the end of 2001. High-level Enron executives participated in an accounting deception whereby they presented company expenses as assets, fooling investors into believing the company was healthy and growing even more profitable. Before the truth about the company's tottering finances emerged, top executives sold their Enron stock, raking in millions of dollars. But special rules prohibited lower-level employees from selling their stock. As the company went belly up, the company's stock price plunged to pennies per share, causing investors to lose millions. Enron employees, whose retirement savings were locked up in company stock, lost not only those savings but also their jobs. This graph shows the price of Enron stock over a six-year period. Use the data in the graph to answer the questions below.
Note: The record of stock prices runs from January through December of each year. Exceptions are 1997, which shows only the last few months, and 2002, which shows the first six months.
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Suppose Sally bought $1,000 worth of Enron stock in late 1997. In which year would she first have seen a doubling of her purchase price?
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Approximately how much would the value of Sally's stock have risen between the first and sixth month of that year? From about (a) $25 to $35; (b) $35 to $50; (c) $30 to $48; (d) $30 to $35.
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Next, suppose Sally sold the stock when its price dipped in the middle of 2000. What price would she...
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