The price of a stock increases by 8% in the first year, decreases by 5% in the second year, and increases by 10% in the third year. If the initial price was $100, what is the price at the end of the third year?

Wed, 06 May 2026 14:29:40 +0000

**The Price of a Stock Grows in a Tiny U-Turn — Here’s How It Works** Investors often notice strange shifts in their portfolios—making gains in one year, dipping the next, then rebounding stronger. Take this classic pattern: a stock rises 8% in year one, falls 5% in year two, and climbs 10% in year three. If you started with $100, where does that $100 land after three years? Behind the small, non-linear shifts lies a clear, data-driven outcome. Understanding how these fluctuations combine reveals not just a final number—but a clearer view of market behavior. **Why This Pattern Matters in Today’s U.S. Markets** Market volatility has become a familiar rhythm for American investors, especially after years of rapid financial shifts driven by inflation, interest rate changes, and evolving investor psychology. Year one’s 8% gain reflects growing confidence—maybe in strong earnings, economic recovery, or tech innovation. The 5% dip in year two often signals caution, a correction after momentum, or external shocks like geopolitical events. Then, a 10% rebound highlights resilience, sector strength, or renewed investor optimism. This cycle reminds us that markets don’t move in straight lines—and knowing these rhythms builds smarter long-term strategies.