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27 Nov 2023, 11:45
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The Widget world has grown from a niche interest of teenage and college boys to a multi-billion dollar industry attracting men and women of all ages. In particular, Next Widget Corporation has had great success, increasing its revenues almost threefold ovcr the past decade, and boasting six of the ten most popular products in the market.
Yet investors have become jittery recently, fearing that widget sales will decline—as gizmo sales did last year—and knocked Next Widget’s stock price down 33% from its peak of $113.17 in late 2011. These fears are misguided. Unlike the gizmo industry, the widget industry should continuc to grow, as more consumers switch from higher-priced Gizmos to more affordable Widgets. Next Widget should also get a boost in revenues from its upcoming expansion into South America.
For now, Next Widget’s stock remains a buy.
Yet investors have become jittery recently, fearing that widget sales will decline—as gizmo sales did last year—and knocked Next Widget’s stock price down 33% from its peak of $113.17 in late 2011. These fears are misguided. Unlike the gizmo industry, the widget industry should continuc to grow, as more consumers switch from higher-priced Gizmos to more affordable Widgets. Next Widget should also get a boost in revenues from its upcoming expansion into South America.
For now, Next Widget’s stock remains a buy.
The first analyst expects that Next Widget will make a profit in South America in the coming year.: Not Infereble
The second analyst expects that Widgitainers’ share price will increase in 2012.: Not Infereble
The second analyst expects that Next Widget’s profits will not increase by more than $193 million in 2012.: Infereble
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
65%
(hard)
Question Stats:
47% (02:50) correct
53%
(02:56)
wrong
based on 1226
sessions
History
Date
Time
Result
Not Attempted Yet
1. For each of the following statements, select Inferable if the statement is reasonably inferable from the information provided. Otherwise, select Not inferable.
| Infereble | Not Infereble | |
| The first analyst expects that Next Widget will make a profit in South America in the coming year. | ||
| The second analyst expects that Widgitainers’ share price will increase in 2012. | ||
| The second analyst expects that Next Widget’s profits will not increase by more than $193 million in 2012. |
ShowHide Answer
Official Answer
The first analyst expects that Next Widget will make a profit in South America in the coming year.: Not Infereble
The second analyst expects that Widgitainers’ share price will increase in 2012.: Not Infereble
The second analyst expects that Next Widget’s profits will not increase by more than $193 million in 2012.: Infereble
345%
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
47% (02:24) correct
53%
(02:27)
wrong
based on 1010
sessions
History
Date
Time
Result
Not Attempted Yet
2. On the day of the first analyst’s report, Next Widget’s stock price was approximately what percent of its stock price at its initial public offering?
| 245% | |
| 278% | |
| 345% | |
| 382% | |
| 482% |
28 Nov 2023, 09:52
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horrorslive
Official Explanation
2. On the day of the first analyst’s report, Next Widget’s stock price was approximately what percent of its stock price at its initial public offering?
Explanation
Whereas the first question was based on an analysis of written information, this question is quantitative and a traditional multiple-choice question, like all the problem solving questions in the Quantitative section of the GMAT. Finally, you will need to consult both tabs in order to answer this question correctly. Both analysts mention the $113.17 share price in late 2011 as the all-time high price the stock has reached.
The second analyst says that this price is 415% higher than the initial public offering (IPO) price, while the first analyst says that the share price has dropped by 33% since reaching $113.17. You’re in Percent Change-land here, and even though you’re given an absolute value ($113.17), you should ignore it for the purpose of answering this question.
It’s true that based on the stock’s all-time high price you can calculate its IPO price and its price at the time of the first analyst’s report (let’s call this the current price), and then find what percent of the IPO price is the current price—but that would be unnecessarily complicated. You’re only looking for a percent change, not actual values.
Let the IPO price be 100. Then, since the all-time high price is 415% higher than the IPO price, the all-time high price is $515. The current price is 33% lower than $515, so it is 67% of $515:
67%*515 = 67/100*515 ~=345
So the current price of (approximately) 345 is (approximately) 345% of the IPO price of 100.
The correct answer is (C).
Explanation
Whereas the first question was based on an analysis of written information, this question is quantitative and a traditional multiple-choice question, like all the problem solving questions in the Quantitative section of the GMAT. Finally, you will need to consult both tabs in order to answer this question correctly. Both analysts mention the $113.17 share price in late 2011 as the all-time high price the stock has reached.
The second analyst says that this price is 415% higher than the initial public offering (IPO) price, while the first analyst says that the share price has dropped by 33% since reaching $113.17. You’re in Percent Change-land here, and even though you’re given an absolute value ($113.17), you should ignore it for the purpose of answering this question.
It’s true that based on the stock’s all-time high price you can calculate its IPO price and its price at the time of the first analyst’s report (let’s call this the current price), and then find what percent of the IPO price is the current price—but that would be unnecessarily complicated. You’re only looking for a percent change, not actual values.
Let the IPO price be 100. Then, since the all-time high price is 415% higher than the IPO price, the all-time high price is $515. The current price is 33% lower than $515, so it is 67% of $515:
67%*515 = 67/100*515 ~=345
So the current price of (approximately) 345 is (approximately) 345% of the IPO price of 100.
The correct answer is (C).
General Discussion
27 Nov 2023, 20:39
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in the 2nd question how did you get 345%?
