Case Study: Technical Stock Analyst To raise money for expansion, many privately owned companies give the public a chance to own part of their company through purchasing stock. Those who buy ownership expect to obtain a share in the future profits of the company. Some technical analysts believe that the greatest profits to be had in the stock market are through buying brand new stocks and selling them quickly. A technical analyst predicts that a stocks price over its first several weeks on the market will follow the pattern shown on the graph. The technical analyst is advising a person who purchased the stock the day it went on sale.

Price ($) Time (weeks) Part A: Make a rough sketch of the graph, and answer the following questions: 1. When would you recommend that the owner sell her shares? Label this point S on your graph. What do you notice about the slope, or instantaneous rate of change, of the graph at this point? [K] 2. When would you recommend that the owner get back into the company and buy shares again? Label this point B on your graph. What do you notice about the slope, or instantaneous rate of change, of the graph at this point? [K] 3. A concave-down section of a graph opens in a downward direction, and a concave-up section opens upward. On your graph, find the point where the concavity changes from concave down to concave up, and label this point C. Another analyst says that a change in concavity from concave down to concave up is a signal that a selling opportunity will soon occur. Do you agree with the analyst? Explain. [T]