Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized for You

we will pick new questions that match your level based on your Timer History

Track Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

It appears that you are browsing the GMAT Club forum unregistered!

Signing up is free, quick, and confidential.
Join other 500,000 members and get the full benefits of GMAT Club

Registration gives you:

Tests

Take 11 tests and quizzes from GMAT Club and leading GMAT prep companies such as Manhattan GMAT,
Knewton, and others. All are free for GMAT Club members.

Applicant Stats

View detailed applicant stats such as GPA, GMAT score, work experience, location, application
status, and more

Books/Downloads

Download thousands of study notes,
question collections, GMAT Club’s
Grammar and Math books.
All are free!

Thank you for using the timer!
We noticed you are actually not timing your practice. Click the START button first next time you use the timer.
There are many benefits to timing your practice, including:

Samantha invests i1 dollars in bond X, which pays r1 [#permalink]

Show Tags

02 Oct 2010, 10:56

2

This post was BOOKMARKED

00:00

A

B

C

D

E

Difficulty:

65% (hard)

Question Stats:

57% (02:26) correct
43% (01:19) wrong based on 148 sessions

HideShow timer Statistics

Samantha invests i1 dollars in bond X, which pays r1 percent simple interest annually, and she invests i2 dollars in bond Y, which pays r2 percent simple interest annually. After one year, will she have earned more interest, in dollars, from bond X than from bond Y ?

(1) \((r1)^2 > (r2)^2\) (2) The ratio of i1 to i2 is larger than the ratio of r1 to r2 .

Why cant 1 be sufficient . We know that interest cannot be negative , therefore (1) eventually leads to r1> r2 . The values of i1 and I2 don’t matter , because even when i2 is greater than i1 , the interest would be less .Eg. i1 : 100 r1: 5% , i2: 150 , r2: 3% , i1r1 > i2r2 giving the required result .

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 11:11

nandini11 wrote:

Samantha invests i1 dollars in bond X , which pays r1 percent simple interest annually, and she invests i2 dollars in bond Y , which pays r2 percent simple interest annually. After one year, will she have earned more interest, in dollars, from bond X than from bond Y ? 1. \((r1)^2 > (r2)^2\) 2. The ratio of i1 to i2 is larger than the ratio of r1 to r2 .

Why cant 1 be sufficient . We know that interest cannot be negative , therefore (1) eventually leads to r1> r2 . The values of i1 and I2 don’t matter , because even when i2 is greater than i1 , the interest would be less .Eg. i1 : 100 r1: 5% , i2: 150 , r2: 3% , i1r1 > i2r2 giving the required result .

OA

Well..i think the answer is E. Because in bonds the interest can be -ve and a variable one.

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 11:33

nandini11 wrote:

Samantha invests i1 dollars in bond X , which pays r1 percent simple interest annually, and she invests i2 dollars in bond Y , which pays r2 percent simple interest annually. After one year, will she have earned more interest, in dollars, from bond X than from bond Y ? 1. \((r1)^2 > (r2)^2\) 2. The ratio of i1 to i2 is larger than the ratio of r1 to r2 .

Why cant 1 be sufficient . We know that interest cannot be negative , therefore (1) eventually leads to r1> r2 . The values of i1 and I2 don’t matter , because even when i2 is greater than i1 , the interest would be less .Eg. i1 : 100 r1: 5% , i2: 150 , r2: 3% , i1r1 > i2r2 giving the required result .

OA

Interest from bond X : i1*r1/100 Interest from bond Y : i2*r2/100 we need to know if i1*r1 > i2*r2 ?

(1) r1^2 > r2^2 ... Not sufficient as it doesn't tell us anything about the actual amounts invested (2) i1/i2 > r1/r2 which implies i1*r2 > i2*r1 ... doesnt help us solve our inequality (1+2) r1^2 > r2^2 So r1 > r2 as interest rate on bond cannot be negative i1*r1 > i1*r2 i2*r1 > i2*r2 Combining with condition known from Statement 2, we get i1*r1 > i2*r2

Answer is (C)

sibanmishra wrote:

Well..i think the answer is E. Because in bonds the interest can be -ve and a variable one.

Bonds can't have negative interest. Variable is irrelevant here as we are given it is fixed
_________________

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 11:46

gurpreetsingh wrote:

First of all recheck the OA - it is C not E. Pls do not mislead people by posting wrong OA.

Sorry about that. i have not been through OG quant. So dint have any idea about the answer. I thought its E, cos i know that bond rates can be -ve when it's in loss. If you don't consider this fact, then the answer becomes C. So, i think it is assumed that the interest is always positive.M i right??

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 12:03

sibanmishra wrote:

gurpreetsingh wrote:

First of all recheck the OA - it is C not E. Pls do not mislead people by posting wrong OA.

Sorry about that. i have not been through OG quant. So dint have any idea about the answer. I thought its E, cos i know that bond rates can be -ve when it's in loss. If you don't consider this fact, then the answer becomes C. So, i think it is assumed that the interest is always positive.M i right??

Samantha invests i1 dollars in bond X , which pays r1 percent simple interest annually, and she invests i2 dollars in bond Y , which pays r2 percent simple interest annually. After one year, will she have earned more interest, in dollars, from bond X than from bond Y ? 1. \((r1)^2 > (r2)^2\) 2. The ratio of i1 to i2 is larger than the ratio of r1 to r2 .

Why cant 1 be sufficient . We know that interest cannot be negative , therefore (1) eventually leads to r1> r2 . The values of i1 and I2 don’t matter , because even when i2 is greater than i1 , the interest would be less .Eg. i1 : 100 r1: 5% , i2: 150 , r2: 3% , i1r1 > i2r2 giving the required result .

OA

First of all: "bond X pays r1 percent simple interest annually" --> so r1 and r2 can not be negative.

After 1 year bond X will earn \(i_1*\frac{r_1}{100}\) and bond Y \(i_2*\frac{r_2}{100}\).

So the question is \(i_1*\frac{r_1}{100}>i_2*\frac{r_2}{100}\)? --> is \(i_1*r_1>i_2*r_2\)?

(1) \((r_1)^2>(r_2)^2\) --> not sufficient as no info about \(i_1\) and \(i_2\). (2) The ratio of i1 to i2 is larger than the ratio of r1 to r2 --> \(\frac{i_1}{i_2}>\frac{r_1}{r_2}\) --> \(i_1*r_2>i_2*r_1\). Not sufficient.

(1)+(2) From (1) \((r_1)^2>(r_2)^2\) --> \(r_1>r_2\) --> \(\frac{r_1}{r_2}>1\) --> so \(\frac{i_1}{i_2}>\frac{r_1}{r_2}>1\) --> \(\frac{i_1}{i_2}>1\) --> \(i_1>i_2\). So as both \(r_1>r_2\) and \(i_1>i_2\) then \(i_1*r_1>i_2*r_2\). Sufficient.

Or: as both part in both inequalities (\((r_1)^2>(r_2)^2\) and \(i_1*r_2>i_2*r_1\)) are positive then we can multiply them: \((r_1)^2*i_1*r_2>(r_2)^2*i_2*r_1\) --> reduce by \(r_1r_2\) --> \(i_1*r_1>i_2*r_2\). Sufficient.

Well..No one till now commented on the possibility of negative interest rate??

There are comments on this in two posts above: we are told that "bond X pays r1 percent simple interest annually" so it can't be negative.
_________________

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 12:52

Hello Bunuel , Shrouded1 , What abt the following consideration . from (1) we know r1 > r2 so irrespective of i1 being greater or less than i2 , we would know that i1*r1 yields high value . Example Consider i1 > i2 (and we know r1 >r2 and i1 and i2 have to be positive values ). say i1 : 150 , i2 : 100 Value of Inv on X : i1*r1 : 150*5% : 7.5 Value of Inv on Y : i2*r2 : 100*3% : 3 Therefore X > Y Take the other case of i1< i2 ( and still r1 >r2 and i1 and i2 have to be positive values ). Say i1 : 100 , i2 : 150 Value of Inv on X : i1*r1 : 100*5% : 5 Value of Inv on Y : i2*r2 : 150*3% : 4.5 So it does not matter what is the principle amount hence (A) or stmnt 1 is sufficient . Where am I going wrong ?

PS : Gurpreet I have corrected the OA .Sorry abt that .

Hello Bunuel , Shrouded1 , What abt the following consideration . from (1) we know r1 > r2 so irrespective of i1 being greater or less than i2 , we would know that i1*r1 yields high value . Example Consider i1 > i2 (and we know r1 >r2 and i1 and i2 have to be positive values ). say i1 : 150 , i2 : 100 Value of Inv on X : i1*r1 : 150*5% : 7.5 Value of Inv on Y : i2*r2 : 100*3% : 3 Therefore X > Y Take the other case of i1< i2 ( and still r1 >r2 and i1 and i2 have to be positive values ). Say i1 : 100 , i2 : 150 Value of Inv on X : i1*r1 : 100*5% : 5 Value of Inv on Y : i2*r2 : 150*3% : 4.5 So it does not matter what is the principle amount hence (A) or stmnt 1 is sufficient . Where am I going wrong ?

PS : Gurpreet I have corrected the OA .Sorry abt that .

That's not correct. Are you saying that interest earned depends only on interest rate?

So if I ask you what would you prefer 1% annual interest from $1,000,000,000 or 100% annual interest from $1?
_________________

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

02 Oct 2010, 13:38

nandini11 wrote:

Hello Bunuel , Shrouded1 , What abt the following consideration . from (1) we know r1 > r2 so irrespective of i1 being greater or less than i2 , we would know that i1*r1 yields high value . Example Consider i1 > i2 (and we know r1 >r2 and i1 and i2 have to be positive values ). say i1 : 150 , i2 : 100 Value of Inv on X : i1*r1 : 150*5% : 7.5 Value of Inv on Y : i2*r2 : 100*3% : 3 Therefore X > Y Take the other case of i1< i2 ( and still r1 >r2 and i1 and i2 have to be positive values ). Say i1 : 100 , i2 : 150 Value of Inv on X : i1*r1 : 100*5% : 5 Value of Inv on Y : i2*r2 : 150*3% : 4.5 So it does not matter what is the principle amount hence (A) or stmnt 1 is sufficient . Where am I going wrong ?

PS : Gurpreet I have corrected the OA .Sorry abt that .

Nandini, the numbers you have taken in this particular case are playing the trick. In your example, the ratio of the R's and I's are peculiar.

Take extreme example. If you think i1 & i2 do not matter. Do this:

Case 1 i1=$10000 and i2=$100 r1=5% and r2=4.99% .. as a result r1>r2 Value of return ......... X = 10000*5% = $500 Y = 100*4.99% = $4.99 X >> Y

Case 2 i1=$100 and i2=$10000 r1=5% and r2=4.99% .. as a result r1>r2 Value of return ......... X = 100*5% = $5 Y = 10000*4.99% = $499 X << Y
_________________

Re: GMAT Club Test -MGMAT Challenge Test 1- DS Question(#5) [#permalink]

Show Tags

11 Nov 2013, 12:59

Bunuel wrote:

nandini11 wrote:

Samantha invests i1 dollars in bond X , which pays r1 percent simple interest annually, and she invests i2 dollars in bond Y , which pays r2 percent simple interest annually. After one year, will she have earned more interest, in dollars, from bond X than from bond Y ? 1. \((r1)^2 > (r2)^2\) 2. The ratio of i1 to i2 is larger than the ratio of r1 to r2 .

Why cant 1 be sufficient . We know that interest cannot be negative , therefore (1) eventually leads to r1> r2 . The values of i1 and I2 don’t matter , because even when i2 is greater than i1 , the interest would be less .Eg. i1 : 100 r1: 5% , i2: 150 , r2: 3% , i1r1 > i2r2 giving the required result .

OA

First of all: "bond X pays r1 percent simple interest annually" --> so r1 and r2 can not be negative.

After 1 year bond X will earn \(i_1*\frac{r_1}{100}\) and bond Y \(i_2*\frac{r_2}{100}\).

So the question is \(i_1*\frac{r_1}{100}>i_2*\frac{r_2}{100}\)? --> is \(i_1*r_1>i_2*r_2\)?

(1) \((r_1)^2>(r_2)^2\) --> not sufficient as no info about \(i_1\) and \(i_2\). (2) The ratio of i1 to i2 is larger than the ratio of r1 to r2 --> \(\frac{i_1}{i_2}>\frac{r_1}{r_2}\) --> \(i_1*r_2>i_2*r_1\). Not sufficient.

(1)+(2) From (1) \((r_1)^2>(r_2)^2\) --> \(r_1>r_2\) --> \(\frac{r_1}{r_2}>1\) --> so \(\frac{i_1}{i_2}>\frac{r_1}{r_2}>1\) --> \(\frac{i_1}{i_2}>1\) --> \(i_1>i_2\). So as both \(r_1>r_2\) and \(i_1>i_2\) then \(i_1*r_1>i_2*r_2\). Sufficient.

Or: as both part in both inequalities (\((r_1)^2>(r_2)^2\) and \(i_1*r_2>i_2*r_1\)) are positive then we can multiply them: \((r_1)^2*i_1*r_2>(r_2)^2*i_2*r_1\) --> reduce by \(r_1r_2\) --> \(i_1*r_1>i_2*r_2\). Sufficient.

Answer: C.

Bunuel: Can you please explain - (2) The ratio of i1 to i2 is larger than the ratio of r1 to r2 --> \(\frac{i_1}{i_2}>\frac{r_1}{r_2}\) --> \(i_1*r_2>i_2*r_1\). Not sufficient.

Can the rates R1 and R2 be fractions? In that case R1^2 > R2^2 would not necessarily mean R1>R2.

Actually it would.

For non-negative \(x\) and \(y\) if \(x^2>y^2\), then \(x>y\): since both sides of \(x^2>y^2\) are non-negative we can take the square root from both sides and get \(x>y\).

Re: Samantha invests i1 dollars in bond X, which pays r1 [#permalink]

Show Tags

14 Apr 2014, 08:48

Read to eat stuff: it will refresh your concept and keep you away from any confusion during exam. Kudos me if it is helpful.

Attachment:

Ratio properties.jpg [ 81.01 KiB | Viewed 1158 times ]

_________________

Piyush K ----------------------- Our greatest weakness lies in giving up. The most certain way to succeed is to try just one more time. ― Thomas A. Edison Don't forget to press--> Kudos My Articles: 1. WOULD: when to use?| 2. All GMATPrep RCs (New) Tip: Before exam a week earlier don't forget to exhaust all gmatprep problems specially for "sentence correction".

gmatclubot

Re: Samantha invests i1 dollars in bond X, which pays r1
[#permalink]
14 Apr 2014, 08:48

Happy New Year everyone! Before I get started on this post, and well, restarted on this blog in general, I wanted to mention something. For the past several months...

It’s quickly approaching two years since I last wrote anything on this blog. A lot has happened since then. When I last posted, I had just gotten back from...

Post-MBA I became very intrigued by how senior leaders navigated their career progression. It was also at this time that I realized I learned nothing about this during my...