1. ## Interpreting graph

Hi,

I'm hoping that someone can provide some input on the following description:

Attachment 38025

Maybe I'm interpreting the information incorrectly, but I can't help but think that this information is conflicting. When I graph R(t), I get a function that plummets immediately, as opposed to rise in value like what the description says. It would be great to get some insight on what other think of this.

- olivia

2. ## Re: Interpreting graph

I am not sure I understand what the function means. It is an overvaluation as a percent of what? Is it the actual value minus the selling price divided by the actual value? So, $\dfrac{a-s}{a}$? Because then, the higher the selling price gets, the lower the overvaluation percentage gets. At the 4 month mark, the stock starts selling for what it is actually worth, then after that, the stock actually becomes more valuable than what it sells for (causing the overvaluation percentage to increase).