Over the last two years, who made more money investing in the stock

800score Official Solution:

Though we know Leslie and Kerri's average returns, we have little idea as to what their total returns are.

These abstract questions are best solved with Plug In. This one can be solved by plugging in 1. For example, if Leslie made a 100% rate of return one year and a -60% rate of return the next year, the average rate of return would be (100% – 60%)/2 = 20%.

However, Leslie would only be left with year one 100% and -60% = (1 + 1) (1 – 0.6) = 2(0.4) = 80% of her original investment. This means that she lost 20%!

So statement (1) is insufficient.

Furthermore, statement (2) is clearly insufficient by itself because no returns are given.
Combined with statement (1), statement (2) doesn’t make the distribution of returns any clearer, so the answer is (E).

but who would make the average of return %??? this is illogical...makes no sense at all..

Hi mvictor

You don't have to do complete calculation to ensure your answer

Data sufficient Questions don't expect you to solve the question completely they only expect you to think deeps and find the sufficiency of Information to answer the given question

Now Average of 5 may be obtained by taking 10 and 0 on one hand

on the other hand Average of 5 may be obtained by taking 5 and 5

If you can think of such two scenarios then you can do a little calculation to ensure whether the information is sufficient or not

P.S. You don't have to solve the equations to last steps in Data Sufficiency, You only have to figure our the consistency/inconsistensy of solutions obtained

thanks for reply. my point of view was that no person who has knowledge of accounting/finance would do such calculations, as such are illogical at all. this is not how average is calculated for return...

Pardon my understanding, but isn't the above term too vague. It's averaged out over what? Annual return is just an assumption. What if Leslie started with $100 and made 20% (which is $20) and Kerri started with $400 did the trades several times a day each with a 5% increase. Wouldn't P*1.05*1.05*1.05*......*1.05 be much bigger than P*1.20 in this case?

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