A person buys a share for $ 50 and sells it for $ 52 after

Oldest

Best Reply

Author

Message

TAGS:

Intern

Joined: 02 Mar 2007

Posts: 31

Followers: 0

Kudos [?]: 0 [0], given: 0

A person buys a share for $ 50 and sells it for $ 52 after [#permalink]

11 Mar 2007, 06:23

00:00

Question Stats:

0% (00:00) correct

0% (00:00) wrong

based on 0 sessions

Hi there,

i have a question concerning the following DS problem:

A person buys a share for $ 50 and sells it for $ 52 after a year. What is the total profit made by him from the share?
(I) A company pays annual dividend
(II) The rate of dividend is 25%

Your Answer : E
Actual Answer : C

i think that the information given is not sufficient. II) states that the dividend is 25%, but fails to say if it is 25% of the purchase price. Do you agree with me?

Director

Joined: 13 Dec 2006

Posts: 524

Location: Indonesia

Followers: 3

Kudos [?]: 65 [0], given: 0

[#permalink]

11 Mar 2007, 06:53

Hi,

Answer is C because statement II says that dividend is 25% but it doesnt state the period. It could be 6 monthly dividend @ 25% per 6 month, while statement I clarify that its annual dividend, hence answer is C, as you have to combine both.

regards,

Amardeep

Director

Affiliations: FRM Charter holder

Joined: 02 Dec 2006

Posts: 737

Schools: Stanford, Chicago Booth, Babson College

Followers: 5

Kudos [?]: 8 [0], given: 4

[#permalink]

11 Mar 2007, 22:39

Amardeep Sharma wrote:

I think..Ppetkov has a valid point here..

Annual dividend is 25%. Agreed. But 25% of what? $50 need not be the basis for calculation. Dividend is calculated on initial offer price. $50 need not be that price. Hence, E can be the answer.

Director

Joined: 13 Dec 2006

Posts: 524

Location: Indonesia

Followers: 3

Kudos [?]: 65 [0], given: 0

[#permalink]

11 Mar 2007, 22:48

yes, technically dividends are given on face value rather than market price of the share.... you have the valid point, but it looks out of scope of the GMAT question... I dont know how to treat it... can someone throw light on this?

regards,

Amardeep

Senior Manager

Joined: 27 Jul 2006

Posts: 301

Followers: 1

Kudos [?]: 4 [0], given: 0

[#permalink]

12 Mar 2007, 11:46

All I know is I would love to have a share that pays a 25 percent dividend with 4 percent annual capital gains...forget about the answer!

Intern

Joined: 02 Mar 2007

Posts: 31

Followers: 0

Kudos [?]: 0 [0], given: 0

[#permalink]

12 Mar 2007, 13:15

heh, it probably depends on your tax status, my friend.

Director

Joined: 13 Dec 2006

Posts: 524

Location: Indonesia

Followers: 3

Kudos [?]: 65 [0], given: 0

[#permalink]

13 Mar 2007, 00:21

It was different, when I was in India... but here in middle-east we dont have to pay taxes :-D

isnt that sound interesting

regards,

Amardeep

[#permalink] 13 Mar 2007, 00:21

	Similar topics	Author	Replies	Last post
Similar Topics:	A person buys a share for $ 50 and sells it for $ 52 after a	4128851	4	28 Nov 2003, 23:54
	Buy and Sell disclaimer for this forum	Paul	5	14 Oct 2005, 10:52
	A person buys a share for $ 50 and sells it for $ 52 after a	IrinaOK	5	18 Oct 2007, 23:19
	JPMorgan to buy Bear for $2 a share	nervousgmat	17	16 Mar 2008, 18:50
	A person buys a share for $ 50 and sells it for $ 52 after a	saurabhkowley18	9	05 Jul 2008, 01:18

A person buys a share for $ 50 and sells it for $ 52 after

Main navigation

GMAT Resources

Partners

MBA Resources

GMAT ® is a registered trademark of the Graduate Management Admission Council ® (GMAC ®). GMAT Club's website has not been reviewed or endorsed by GMAC.

GMAT Courses

Admissions Consulting

A person buys a share for $ 50 and sells it for $ 52 after

A person buys a share for $ 50 and sells it for $ 52 after

Main navigation

GMAT Resources

Partners

MBA Resources