Make the original price of the stock $100. The initial 20% decrease brings the price down to $80 (20% of 100 is 20). Then 25% or
of $80 is $20. Therefore, the price of the stock is decreased by an additional $20, bringing the final price down to $60. Becausethe price dropped from $100 to $60, the total decrease is $40 or 40% of the original price. (A) is the correct answer.
You may have been able to solve this problem by setting up algebraic equations, but picking 100 is easier and faster here.
100% HELPFUL
Always pick 100 for percent problems—it will help you find the answer quickly and accurately!