Bunuel wrote:
Tough and Tricky questions: Percents.
A broker invested her own money in the stock market. During the first year, she increased her stock market wealth by 50 percent. In the second year, largely as a result of a slump in the stock market, she suffered a 30 percent decrease in the value of her stock investments. What was the net increase or decrease on her overall stock investment wealth by the end of the second year?
A) −5%
B) 5%
C) 15%
D) 20%
E) 80%
Kudos for a correct solution.Source: Chili Hot GMAT
Official Solution:A broker invested her own money in the stock market. During the first year, she increased her stock market wealth by 50 percent. In the second year, largely as a result of a slump in the stock market, she suffered a 30 percent decrease in the value of her stock investments. What was the net increase or decrease on her overall stock investment wealth by the end of the second year?A) −5%
B) 5%
C) 15%
D) 20%
E) 80%
Elimination and GuessingIf you must guess, the key strategies of elimination include: (1) eliminate an answer that looks different from the others (2) eliminate answers which look too big or too small, i.e., extreme answers, and (3) eliminate answers which contain the same or similar numbers as given in the question or are easy derivatives of the numbers used in the problem. By easy derivatives, think in terms of addition and subtraction, not multiplication and division. For example, eliminate −5% because it is negative, and thus different from the other positive numbers. Eliminate 80% because it is much bigger than any other number (extreme). Eliminate 20% because it is an easy derivative of the numbers mentioned in the question, (i.e., 50% less 30%). You would then guess choices B or C. The actual answer is obtained by multiplying 150% by 70% and subtracting 100% from this total. That is: 150% × 70% = 105%; 105% − 100% = 5%.
Answer: B.