Hello all. Here, for practice, is are a couple IR Table Analysis questions. Unfortunately, GC doesn't currently have a way to post sortable tables, so I have images of the sorted tables posted as links. Also, I Have done my best within this medium to create the appearance the Multiple Dichotomous Choice question format you will see in GMAT IR TA questions. This is a relatively simple table -- most of the tables on the IR section will be larger.

Enjoy!

Mike

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The table shows 12 popular stocks that are not members of the Dow Jones Industrial Average. For each stock, the table shows the name of the company, the ticker symbol, and the price on January 1st for three consecutive years.

Sorted by company name:


Sorted by price on January 1, 2010:


Sorted by price on January 1, 2011:


Sorted by price on January 1, 2012:


Question #1:

On the basis of the information in the table, decide whether the following statements are true or false.

___true ____false____1a) For two of the three years shown, the three most expensive stocks are the same

___true ____false____1b) At least two stocks increase by at least 30% for two years in a row

___true ____false____1c) No stock that dropped in value from 1/1/10 to 1/1/11 increase by 30% in the following year


Question #2:

For the following trades on given dates, tell whether the net result would be to have more or less money by 1/1/12. In each case, assume a large number of shares is involved in the trade, so that the difference between the cash from the sale and the price of a whole number of new shares is negligible. The cash amount of the stocks you sell will equal, almost exactly, the cash amount of the stocks you buy, but the number of shares bought & sold may or may not be the same.

__more money by 1/1/12____less money by 1/1/12____2a) On January 1, 2010, sell shares of GOOG, and use the money to buy shares of AAPL

__more money by 1/1/12____less money by 1/1/12____2b) On January 1, 2010, sell shares of OPEN, and use the money to buy shares of HLF

__more money by 1/1/12____less money by 1/1/12____2c) On January 1, 2010, sell shares of AAPL, and use the money to buy shares of ACAT


Answers:

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Mike McGarry
Magoosh Test Prep

Thank you for your compliments. I'll explain just (2a), and that might be enough to understand the others. If you got the exact opposite answer for all three, that suggests you were misinterpreting the questions consistently.

Suppose on 1/1/2010, I owe a ton of share of GOOG. Say, I have a million dollars of GOOG, or a hundred million shares --- for the calculation, it doesn't matter. In the real stock market, of course I would diversify, but in this pretend problem, I have only two choices:

a) hold the GOOG for two years

b) sell the GOOG on 1/1/2010, buy AAPL with the money, and hold that for two years.

I want to know how the second option compares to the first.

If I simply hold GOOG for two years, the share price goes from 626.95 to 652.94 --- that's less than a 10% increase --- let's estimate it's about a 5% increase. That would mean, my million dollars of GOOG stock would increase 5% in that period.

If I dump the GOOG, and invest the money in AAPL, that means I buy the AAPL on 1/1/2010 at $213.43 and in two years, it's at $409.40. That's almost double. If I had performed this trade, I would have made almost 100% on my money in two years.

So, the question is --- if I do this trade, if I go with (b) does this leave me with more or less money than if I had stayed put with (a)?

Clearly, 100% is larger than 5%, so if I had gone with option (b) I would have made more money.

Does that make sense? Please let me know if you have any further questions about this.

Mike
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Mike McGarry
Magoosh Test Prep

hi all, apart from the very useful pdf on IR questions Magoosh released recently, can anybody suggest what other test prep material you're using for the IR?

OG13/new GMAC apart, I heard that Manhattan's new test series has an IR section, wondering if I should purchase. Any thing else worth while?
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How to improve your RC score, pls Kudo if helpful! http://gmatclub.com/forum/how-to-improve-my-rc-accuracy-117195.html
Work experience (as of June 2012)
2.5 yrs (Currently employed) - Mckinsey & Co. (US Healthcare Analyst)
2 yrs - Advertising industry (client servicing)