Equal but Opposite Percentage Changes Do Not Cancel

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Equal percentage increases and decreases do not cancel. The resulting change, , is always less than the initial value. For example, if you make 50% on an investment and then lose 50%, the result is a loss of 25%: . Going the other way, to make up for a loss of 50%, you need to make 100%, not just 50%.

Contributed by: Michael Schreiber (March 2011)
Open content licensed under CC BY-NC-SA


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