Bunuel
John bought 2 shares and sold them for $96 each. If he had a profit of 20% on the sale of one of the shares but a loss of 20% on the sale of the other share, then on the sale of both shares John had
(A) a profit of $10
(B) a profit of $8
(C) a loss of $8
(D) a loss of $10
(E) neither a profit nor a loss
Kudos for a correct solution.
VERITAS PREP OFFICIAL SOLUTIONNote that the question would have been straight forward had the COST price been the same, say $100. A 20% profit would mean a gain of $20 and a 20% loss would mean a loss of $20. Overall, there would have been no profit no loss.
Here the two shares are sold at the same SALE price. One at a profit of 20% on cost price which must be lower than the sale price (to get a profit) and the other at a loss of 20% on cost price which must be higher than the sale price (to get a loss). 20% of a lower amount will be less in dollar terms and hence overall, there will be a loss.
The loss % = (20)^2/100 % = 4%.
But we need the amount of loss, not the percentage of loss.
Total Sale price of the two shares = 2*96 = $192
Since there is a loss of 4%, the 96% of the total cost price must be the total sale price
(96/100)*Cost Price = Sale Price
Cost Price = $200
Loss = $200 – $192 = $8
Answer (C)