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05 Jun 2025, 06:09
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Yeah both ways the answer is the same, but I wanted to understand if what I'm calculating is actually what the question is asking. If the choices were a little closer to one another, it would matter how we interpret the STEM. The question has the tag that indicates it's an official GMAT question from the official Mock tests of the older edition (before the focus one)
MBABackstage
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05 Jun 2025, 06:42
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It can be interpreted both ways (there are various ways of defining how we calculate a return on investment) and normally an official question would be clearer on that. I wouldnt worry about it too much. The chances of you having a similar question, where you need to be precise are very low based on my experience.
08 Jun 2025, 23:36
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"Gain on an Investment" will typically take the cost of investment into consideration as well, if given. So transaction charges are relevant but they are so small that they can be ignored.
In fact, the 1/8 in the cost price and 2% transaction cost all can be ignored since as a percent of profit on the transaction, all these costs are minimal.
When I looked at this question again, I wondered why I had even taken 1/8 into consideration. With profit of about $18, 1/8 is a negligible percentage and the first estimation should be "below 300" as done here now: https://gmatclub.com/forum/an-investor- ... l#p3477717
In fact, the 1/8 in the cost price and 2% transaction cost all can be ignored since as a percent of profit on the transaction, all these costs are minimal.
When I looked at this question again, I wondered why I had even taken 1/8 into consideration. With profit of about $18, 1/8 is a negligible percentage and the first estimation should be "below 300" as done here now: https://gmatclub.com/forum/an-investor- ... l#p3477717
siddhantvarma
