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High Interest Bond

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Author Message
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Director
Director
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Status: Preparing for the 4th time -:(
Joined: 25 Jun 2011
Posts: 563
Location: United Kingdom
Concentration: International Business, Strategy
GMAT Date: 06-22-2012
GPA: 2.9
WE: Information Technology (Consulting)
Followers: 12

Kudos [?]: 216 [0], given: 217

GMAT Tests User
High Interest Bond [#permalink] New post 15 Nov 2011, 14:44
00:00
A
B
C
D
E

Difficulty:

  5% (low)

Question Stats:

60% (02:40) correct 40% (01:09) wrong based on 5 sessions
A certain sum was invested in a high-interest bond for which the interest is compounded monthly. The bond was sold x number of months later, where x is an integer. If the value of the original investment doubled during this period, what was the approximate amount of the original investment in dollars?

(1) The interest rate during the period of investment was greater than 39 percent but less than 45 percent.
(2) If the period of investment had been one month longer, the final sale value of the bond would have been approximately $2,744.

I don't have a answer for this. But can someone please have a look into this and let me know how to solve this? :cry:
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Best Regards,
E.

MGMAT 1 --> 530
MGMAT 2--> 640
MGMAT 3 ---> 610 :-(

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Joined: 16 Sep 2010
Posts: 226
Location: United States
Concentration: Finance, Real Estate
GMAT 1: 740 Q48 V42
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Kudos [?]: 53 [0], given: 2

GMAT Tests User
Re: High Interest Bond [#permalink] New post 15 Nov 2011, 15:47
So we now there was an investment in a bond that compounds monthly for X months. X is a whole number so no fractional months, and that the value of the bond doubled in our X months of investment.

Statement 1 - gives us not info about value - granted we can back into a range of X but a dollar amount is impossible - insuff.
Statement 2- gives us a value at X+1, but its impossible to determine the starting value as we do not know either the interest rate or the starting value - insuff.

Together you have a range of rates and a X-1 ending value. Since the starting value doesn't have to be an integer and the interest rate doesn't have to be an integer either their are a number of possible answers for this.


I would say it should be E.
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Joined: 12 Jul 2011
Posts: 154
Concentration: Operations, Strategy
GMAT 1: 680 Q46 V37
WE: Engineering (Telecommunications)
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GMAT Tests User
Re: High Interest Bond [#permalink] New post 15 Nov 2011, 20:54
1
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Answer is C.
You can find a good explanation here: http://www.urch.com/forums/gmat-math/20537-interest-rates.html
Manager
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Joined: 08 Sep 2011
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Concentration: Finance, Strategy
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Re: High Interest Bond [#permalink] New post 16 Nov 2011, 09:05
I decided on C after three mins, but it was more of a guess off of what I know rather than confirmation. Just hope you don't get one of these on the test
Re: High Interest Bond   [#permalink] 16 Nov 2011, 09:05
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