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15 Jan 2014, 14:25
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A
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
35%
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Question Stats:
72% (01:46) correct
28%
(01:51)
wrong
based on 210
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Mr. Odusote owns two kinds of stock shares: r shares of stock X and r shares of stock Y. Stock X yields an annual dividend of 2%, while stock Y yields an annual dividend of 6%. If Mr. Odusote were to sell all or his shares of stock X and use that money to purchase shares of stock Y, by what percent would his annual dividend increase?
(1) Each share of stock X costs twice as much as each share of stock Y.
(2) Each share of stock Y costs $45.
OE
(1) Each share of stock X costs twice as much as each share of stock Y.
(2) Each share of stock Y costs $45.
OE
x = value of one share of X
y = value of one share of Y
Old Value = [2%xr + 6%yr]
(1): x = 2y
New value = 6%y(r + 2r) = 18%yr
Old value = (2%×(2yr) + 6%yr) = 10%yr
Able to find % change
Sufficient
(2): Not given cost of stock X
Insufficient
y = value of one share of Y
Old Value = [2%xr + 6%yr]
(1): x = 2y
New value = 6%y(r + 2r) = 18%yr
Old value = (2%×(2yr) + 6%yr) = 10%yr
Able to find % change
Sufficient
(2): Not given cost of stock X
Insufficient
15 Jan 2014, 18:23
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goodyear2013
Mr. Odusote owns two kinds of stock shares: r shares of stock X and r shares of stock Y. Stock X yields an annual dividend or 2%, while stock Y yields an annual dividend or 6%. If Mr. Odusote were to sell all or his shares of stock X and use that money to purchase shares of stock Y, by what percent would his annual dividend increase?
(1) Each share of stock X costs twice as much as each share of stock Y.
(2) Each share of stock Y costs $45.
Dear goodyear2013,(1) Each share of stock X costs twice as much as each share of stock Y.
(2) Each share of stock Y costs $45.
I'm happy to help.
You may find this blog article germane to this problem:
https://magoosh.com/gmat/2013/gmat-quant ... oportions/
Statement #1:
Suppose each share of Y costs P, so each share of X costs 2P.
Right now
from X, a dividend of (0.02)*r(2P) = (0.04)*rP
from Y, a dividend of (0.06)*rP
thus, a total dividend of (0.10)*rP
Selling r share of X would allow Mr. Odusote to purchase 2r shares of Y, for a total cache of 3r shares of Y
Then,
dividend = (0.06)*(3r)P = (0.18)*rP
The percent change from (0.10)*rP to (0.18)*rP would be the same as the percent change from 10 to 18. That's an 80% increase. We can calculate an answer from this. This statement, alone and by itself, is sufficient.
Statement #2:
Now, we know the actual price of a share of Y, but we have absolutely no clue about the price of X or even whether it is greater or less than X. This statement, alone and by itself, is insufficient.
Answer = (A)
Does all this make sense?
Mike
21 Nov 2019, 07:23
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