NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
A stock closes at Rs 250 today. Ten trading days ago it closed at Rs 200. Using the 10-day rate of change (ROC) expressed as a percentage of the price ten days ago, what is the ROC value?
The 10-day rate of change is 25%. It is calculated as the price change of Rs 50 divided by the earlier price of Rs 200, multiplied by 100. Using today's price as the base would wrongly give 20%.
- A20%
- B25%Correct
- C50%
- D125%
Explanation
ROC = (current close − close 10 days ago) / close 10 days ago × 100 = (250−200)/200 × 100 = 25%. Using the current price as the base gives 20%, which is the wrong base. Rs 50 is the absolute change, and 125% is the ratio of prices expressed as a percent (250/200).
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