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Mr. Odusote owns two kinds of stock shares: r shares of

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Mr. Odusote owns two kinds of stock shares: r shares of [#permalink] New post 15 Jan 2014, 13:25
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Question Stats:

67% (02:21) correct 33% (00:59) wrong based on 30 sessions
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"/o. 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.

OE
[Reveal] Spoiler:
x = value of one share of X
y = value of one share of Y
Old Value = [2%xr + 6%yr]

(1): x = 2y
New value = 6%y(r + 2r) = 18%yr
Old value = (2%×(2yr) + 6%yr) = 10%yr
Able to find % change
Sufficient
(2): Not given cost of stock X
Insufficient
[Reveal] Spoiler: OA
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Magoosh GMAT Instructor
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Re: Mr. Odusote owns two kinds of stock shares: r shares of [#permalink] New post 15 Jan 2014, 17:23
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goodyear2013 wrote:
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.

Dear goodyear2013,
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.
Right now
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
Then,
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?
Mike :-)
_________________

Mike McGarry
Magoosh Test Prep

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Re: Mr. Odusote owns two kinds of stock shares: r shares of   [#permalink] 15 Jan 2014, 17:23
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