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# Last year the price per share of Stock X increased by k

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Director
Joined: 27 Jun 2008
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WE 1: Investment Banking - 6yrs
Last year the price per share of Stock X increased by k [#permalink]

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17 Sep 2008, 07:16
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Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k m %
B. (k – m) %
C. [100(k – m)] / (100 + k) %
D. [100(k – m)] / (100 + m) %
E. [100(k – m)] / (100 + k + m) %

Whats the simplest way to work on such problems? Plugin numbers?

Kudos [?]: 68 [1], given: 92

SVP
Joined: 07 Nov 2007
Posts: 1795

Kudos [?]: 1033 [1], given: 5

Location: New York
Re: PS - Q17 [#permalink]

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17 Sep 2008, 08:26
1
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pawan203 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k m %
B. (k – m) %
C. [100(k – m)] / (100 + k) %
D. [100(k – m)] / (100 + m) %
E. [100(k – m)] / (100 + k + m) %

Whats the simplest way to work on such problems? Plugin numbers?

S2=S1(1+K/100)
E2=E1(1+M/100)

(S2/E2)= (S1/E1)*((1+K/100)/(1+M/100))
= (S1/E1)*(1+((K+100)/(M+100))-1)
=(S1/E1)*(1+ (K-M)/(M+100) )

100(k- m)] / (100 + m) %
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Kudos [?]: 1033 [1], given: 5

Retired Moderator
Joined: 18 Jul 2008
Posts: 964

Kudos [?]: 285 [0], given: 5

Re: PS - Q17 [#permalink]

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17 Sep 2008, 16:23
(S2/E2)= (S1/E1)*((1+K/100)/(1+M/100))
= (S1/E1)*(1+((K+100)/(M+100))-1)
=(S1/E1)*(1+ (K-M)/(M+100) )

I do not understand how you went about it here (bold). Can you explain?

Thanks.

x2suresh wrote:
pawan203 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k m %
B. (k – m) %
C. [100(k – m)] / (100 + k) %
D. [100(k – m)] / (100 + m) %
E. [100(k – m)] / (100 + k + m) %

Whats the simplest way to work on such problems? Plugin numbers?

S2=S1(1+K/100)
E2=E1(1+M/100)

(S2/E2)= (S1/E1)*((1+K/100)/(1+M/100))
= (S1/E1)*(1+((K+100)/(M+100))-1)
=(S1/E1)*(1+ (K-M)/(M+100) )

100(k- m)] / (100 + m) %

Kudos [?]: 285 [0], given: 5

Director
Joined: 27 Jun 2008
Posts: 541

Kudos [?]: 68 [0], given: 92

WE 1: Investment Banking - 6yrs
Re: PS - Q17 [#permalink]

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18 Sep 2008, 14:07
Can you please elaborate? woudln't plugin in numbers be easier?

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Manager
Joined: 11 Jan 2008
Posts: 54

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Re: PS - Q17 [#permalink]

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18 Sep 2008, 14:26
assume original price per share is 100 and earnings is also 100.
assume k=20 and m=10.

100/100 + X = 120/110 where X is the increase.

solving this we get X to be 1/11.

putting same values in D,

[100(k – m)] / (100 + m) %

100(10)/110 we also get 1/11.

so D.

Is this correct way of doing guys?

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Current Student
Joined: 11 May 2008
Posts: 555

Kudos [?]: 216 [0], given: 0

Re: PS - Q17 [#permalink]

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18 Sep 2008, 19:36
jackychamp wrote:
assume original price per share is 100 and earnings is also 100.
assume k=20 and m=10.

100/100 + X = 120/110 where X is the increase.

solving this we get X to be 1/11.

putting same values in D,

[100(k – m)] / (100 + m) %

100(10)/110 we also get 1/11.

so D.

Is this correct way of doing guys?

any method which is fast and gives result is ok. UR method is also fine.

Kudos [?]: 216 [0], given: 0

VP
Joined: 18 May 2008
Posts: 1262

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Re: PS - Q17 [#permalink]

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01 Oct 2008, 17:30
Actually It is % increase in S1/E1 = {(S1/E1)*((1+K/100)/(1+M/100))- (S1/E1)}/ (S1/E1)
NOw take (S1/E1) common and solve, u will get the answer

(S2/E2)= (S1/E1)*((1+K/100)/(1+M/100))
= (S1/E1)*(1+((K+100)/(M+100))-1)
=(S1/E1)*(1+ (K-M)/(M+100) )

I do not understand how you went about it here (bold). Can you explain?

Thanks.

x2suresh wrote:
pawan203 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k m %
B. (k – m) %
C. [100(k – m)] / (100 + k) %
D. [100(k – m)] / (100 + m) %
E. [100(k – m)] / (100 + k + m) %

Whats the simplest way to work on such problems? Plugin numbers?

S2=S1(1+K/100)
E2=E1(1+M/100)

(S2/E2)= (S1/E1)*((1+K/100)/(1+M/100))
= (S1/E1)*(1+((K+100)/(M+100))-1)
=(S1/E1)*(1+ (K-M)/(M+100) )

100(k- m)] / (100 + m) %

Kudos [?]: 510 [0], given: 0

VP
Joined: 17 Jun 2008
Posts: 1378

Kudos [?]: 392 [0], given: 0

Re: PS - Q17 [#permalink]

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01 Oct 2008, 22:31
pawan203 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share
of Stock X increased by m percent, where k is greater than m. By what percent did the
ratio of price per share to earnings per share increase, in terms of k and m?
A. k m %
B. (k – m) %
C. [100(k – m)] / (100 + k) %
D. [100(k – m)] / (100 + m) %
E. [100(k – m)] / (100 + k + m) %

Whats the simplest way to work on such problems? Plugin numbers?

1+k/100 /1+m/100 *100 is the answer !!!!
IMO D
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Re: PS - Q17   [#permalink] 01 Oct 2008, 22:31
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# Last year the price per share of Stock X increased by k

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