Find all School-related info fast with the new School-Specific MBA Forum
Learn more about the recent changes... close

It is currently 18 May 2013, 02:12
Customize  |  Hide

Search
Register
New posts
Unanswered

An investor purchased a share of non-dividend-paying stock

  Question banks Downloads My Bookmarks Reviews  
  Oldest Best Reply
Search for:
 
Print view
First unread post
Author Message
TAGS:
Intern
Intern
User avatar
Joined: 10 Feb 2007
Posts: 46
Followers: 0

Kudos [?]: 3 [0], given: 0

An investor purchased a share of non-dividend-paying stock [#permalink] New post 14 Apr 2007, 17:55
An investor purchased a share of non-dividend-paying stock for p dollars on Monday. For a certain number of days, the value of the share increased by r percent per day. After this period of constant increase, the value of the share decreased the next day by q dollars and the investor decided to sell the share at the end of that day for v dollars, which was the value of the share at that time. How many working days after the investor bought the share was the share sold, if
(see image)

Two working days later.
Three working days later.
Four working days later.
Five working days later.
Six working days later.
Attachments

compound%20interest%20question.gif
compound%20interest%20question.gif [ 709 Bytes | Viewed 462 times ]

Senior Manager
Senior Manager
Joined: 01 Jan 2007
Posts: 332
Followers: 1

Kudos [?]: 10 [0], given: 0

GMAT Tests User
Re: Another 700 level Question - Percents [#permalink] New post 15 Apr 2007, 23:54
Witchiegrlie wrote:
An investor purchased a share of non-dividend-paying stock for p dollars on Monday. For a certain number of days, the value of the share increased by r percent per day. After this period of constant increase, the value of the share decreased the next day by q dollars and the investor decided to sell the share at the end of that day for v dollars, which was the value of the share at that time. How many working days after the investor bought the share was the share sold, if
(see image)

Two working days later.
Three working days later.
Four working days later.
Five working days later.
Six working days later.


Okay let d=total no. of days for which the price of the stock increases at r% a day.

Now form the question stem we can make the following equation.

v= p [1 + r/100]^d - q
there fore (v+q)/p = [ 1 + r/100 ]
But form the question stem we have r= 100 [ sqrt [ ( v+q)/p] ]
Therefore (v+q)/p= ( 1+ r/100)^d=( r/100 +1)^2

Therefore d=2. So the trader sold the stock after 2+1= 3 days.

Javed.


Cheers!
Manager
Manager
Joined: 11 Nov 2006
Posts: 145
Followers: 1

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

 [#permalink] New post 29 Apr 2007, 02:02
B) 3 days

- the price increased by r/100 per day over 'x' days -> p * [1+(r/100)]^x
- the price was reduced by 'q' on day 'x+1' -> p * [1+(r/100)]^x - q
- the selling price was 'v' -> v = p * [1+(r/100)]^x - q

v+q/p = [1+(r/100)]^x
if we compare the above formula with the one given, we will note that x=2, therefore this person sold the share in day x+1 = 3 days later.
Intern
Intern
User avatar
Joined: 01 Dec 2007
Posts: 34
Followers: 0

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

 [#permalink] New post 08 Dec 2007, 11:23
querio wrote:
B) 3 days

- the price increased by r/100 per day over 'x' days -> p * [1+(r/100)]^x
- the price was reduced by 'q' on day 'x+1' -> p * [1+(r/100)]^x - q
- the selling price was 'v' -> v = p * [1+(r/100)]^x - q

v+q/p = [1+(r/100)]^x
if we compare the above formula with the one given, we will note that x=2, therefore this person sold the share in day x+1 = 3 days later.


So the trick is to know the interest compounding formula and set it equal to V.
  [#permalink] 08 Dec 2007, 11:23
    Similar topics Author Replies Last post
Similar
Topics:
 New posts Many investors base their choice between bonds and stocks eyal 5 08 Apr 2004, 10:22
New posts Gmatprep - shares of stock joyce 3 04 Feb 2007, 11:35
New posts 1 An investor purchased a share of non-dividend-paying stock singh_amit19 3 06 Oct 2007, 01:01
New posts 1 EXPERTS_POSTS_IN_THIS_TOPIC Value per share of the stock enigma123 1 15 Mar 2012, 03:47
New posts EXPERTS_POSTS_IN_THIS_TOPIC If the only stocks that an investor owns are 75 shares of rpamecha 2 18 Apr 2012, 10:04
Display posts from previous: Sort by

An investor purchased a share of non-dividend-paying stock

  Question banks Downloads My Bookmarks Reviews  
Print view
First unread post

Moderators: Bunuel, VeritasPrepKarishma

Search for:


GMAT Club MBA Forum Home| About| Privacy Policy| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group and phpBB SEO

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.

Main navigation

GMAT Resources

Partners

MBA Resources

www.gmac.com|www.mba.com