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CAT 2024 Slot 1 — DILR Question 1

Bar GraphsEasy
Passage / Data

Answer the following questions based on the information given.

The chart below shows the price data for seven shares – A, B, C, D, E, F, and G as a candlestick plot for a particular day. The vertical axis shows the price of the share in rupees. A share whose closing price (price at the end of the day) is more than its opening price (price at the start of the day) is called a bullish share; otherwise, it is called a bearish share. All bullish and bearish shares are shown in green and red colour respectively.

Candlestick chart of seven shares A-G

Reading the candles against the gridlines (each gridline = ₹200), the open / close / high / low values are approximately:

ShareOpenCloseHighLowType
A2100190024001500Bearish (red)
B2000175020501300Bearish (red)
C85013501400750Bullish (green)
D60010501150300Bullish (green)
E1300115014501100Bearish (red)
F1900170021501650Bearish (red)
G1300175018001250Bullish (green)

For a red (bearish) candle the body top is the opening and the body bottom is the closing; for a green (bullish) candle the body bottom is the opening and the body top is the closing. The thin wicks mark the day’s high and low.

Daily Share Price Variability (SPV) is defined as (Day’s high price - Day’s low price) / (Average of the opening and closing prices during the day). Which among the shares A, C, D and F had the highest SPV on that day?

Answer & solution

  • A

    F

  • B

    A

  • C

    C

  • D

Solution

Easy

SPV is largest when the high–low spread is large compared with the typical price. Read each candle, then compute SPV for the four named shares.

Read of the candles (each gridline = ₹200; red: body top = open, body bottom = close; green: reversed; wicks = high/low):

ShareOpenCloseHighLow
A2100190024001500
C85013501400750
D60010501150300
F1900170021501650
1

Write the SPV formula. Per the definition,

SPV=High−Low12(Open+Close)\begin{aligned} &\text{SPV}=\dfrac{\text{High}-\text{Low}}{\tfrac12(\text{Open}+\text{Close})} \end{aligned}
2

Compute SPV for A, C, D, F. Substitute the read values from the Set-up.

SPVA=2400−150012(2100+1900)=9002000=0.45(from chart)⇒ SPVC=1400−75012(850+1350)=6501100≈0.59⇒ SPVD=1150−30012(600+1050)=850825≈1.03⇒ SPVF=2150−165012(1900+1700)=5001800≈0.28\begin{aligned} &\text{SPV}_A=\dfrac{2400-1500}{\tfrac12(2100+1900)}=\dfrac{900}{2000}=0.45 \quad\text{(from chart)}\\ &\Rightarrow\ \text{SPV}_C=\dfrac{1400-750}{\tfrac12(850+1350)}=\dfrac{650}{1100}\approx0.59\\ &\Rightarrow\ \text{SPV}_D=\dfrac{1150-300}{\tfrac12(600+1050)}=\dfrac{850}{825}\approx1.03\\ &\Rightarrow\ \text{SPV}_F=\dfrac{2150-1650}{\tfrac12(1900+1700)}=\dfrac{500}{1800}\approx0.28 \end{aligned}
3

Pick the maximum. D has by far the widest spread (its lower wick plunges to ₹300) on a modest average price, so its SPV dominates.

max⁡(0.45, 0.59, 1.03, 0.28)=1.03=SPVD(from step 2)\begin{aligned} &\max(0.45,\,0.59,\,1.03,\,0.28)=1.03=\text{SPV}_D \quad\text{(from step 2)} \end{aligned}
D\textbf{D}

No arithmetic needed for the winner: D’s long lower wick gives the biggest high−low gap while its body sits low — both push SPV up.

CAT 2024 Slot 1 DILR Q1: Daily Share Price Variability (SPV) is defined as (Day’s high price - Day’s low price) / (Average — Solution | TheCATExam