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# At the end of the first quarter, the share price of a

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Manager
Joined: 13 Mar 2007
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At the end of the first quarter, the share price of a [#permalink]  02 Apr 2008, 14:00
At the end of the first quarter, the share price of a certain mutual fund was 20 percent higher than it was the beginning of the year. At the end of the second quarter, the share price was 50 percent higher than it was at the beginning of the year. What was the percent increase in the share price from the end of the first quarter to the end of the second quarter?

Here is what I did:

Beginning of the year: 100 --> end of the first quarter: 120
Beginning of the year: 100 --> end of the second quarter: 150

Q1 - Q2 = > 150 – 120 = 30, but the correct answer is 25. Why?
SVP
Joined: 29 Aug 2007
Posts: 2497
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Re: A question from GMATPrep [#permalink]  02 Apr 2008, 14:20
GMAT_700 wrote:
At the end of the first quarter, the share price of a certain mutual fund was 20 percent higher than it was the beginning of the year. At the end of the second quarter, the share price was 50 percent higher than it was at the beginning of the year. What was the percent increase in the share price from the end of the first quarter to the end of the second quarter?

Here is what I did:

Beginning of the year: 100 --> end of the first quarter: 120
Beginning of the year: 100 --> end of the second quarter: 150

Q1 - Q2 = > 150 – 120 = 30, but the correct answer is 25. Why?

y0 = p
q1 = 1.20p
q2 = 1.50p
so % increase from q1 to q2 = 1.50p/1.20p - 1
so % increase from q1 to q2 = 1.25 - 1 = 0.25
or 25%
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Senior Manager
Joined: 16 Aug 2004
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Re: A question from GMATPrep [#permalink]  03 Apr 2008, 02:08
Gmat 700, you have to take 120 (q1 result) as the base and not 100 and therefore 25%
CEO
Joined: 21 Jan 2007
Posts: 2764
Location: New York City
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Re: A question from GMATPrep [#permalink]  03 Apr 2008, 07:20
Holding Period Return = (Ending - Beginning) / Beginning

h1 = 100
h2 = 120
h3 = 150

(150 - 120) / 120
30 / 120
25%
_________________

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Re: A question from GMATPrep   [#permalink] 03 Apr 2008, 07:20
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