Mr. Odusote owns two kinds of stock shares: r shares of stock X and r shares of stock Y. Stock X yields an annual dividend or 2%, while stock Y yields an annual dividend or 6%. If Mr. Odusote were to sell all or his shares of stock X and use that money to purchase shares of stock Y, by what percent would his annual dividend increase?
(1) Each share of stock X costs twice as much as each share of stock Y.
(2) Each share of stock Y costs $45.
I'm happy to help.
You may find this blog article germane to this problem:http://magoosh.com/gmat/2013/gmat-quant ... oportions/Statement #1
Suppose each share of Y costs P, so each share of X costs 2P.
from X, a dividend of (0.02)*r(2P) = (0.04)*rP
from Y, a dividend of (0.06)*rP
thus, a total dividend of (0.10)*rP
Selling r share of X would allow Mr. Odusote to purchase 2r shares of Y, for a total cache of 3r shares of Y
dividend = (0.06)*(3r)P = (0.18)*rP
The percent change from (0.10)*rP to (0.18)*rP would be the same as the percent change from 10 to 18. That's an 80% increase. We can calculate an answer from this. This statement, alone and by itself, is sufficient
. Statement #2
Now, we know the actual price of a share of Y, but we have absolutely no clue about the price of X or even whether it is greater or less than X. This statement, alone and by itself, is insufficient
Answer = (A)
Does all this make sense?
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