For which type of investment, J or K, is the annual rate of return gre

Question

For which type of investment, J or K, is the annual rate of return greater?

(1) Type J returns $115 per $1,000 invested for any one-year period and type K returns $300 per $2,500 invested for any one-year period.
(2) The annual rate of return for an investment of type K is 12 percent.

JeffTargetTestPrep · Accepted Answer

We need to determine which investment, J or K, provides a greater annual rate of return. That is, we are being asked whether J’s annual rate of return is greater than K’s annual rate of return.

Statement One Alone:

Type J returns $115 per $1,000 invested for any one-year period and type K returns $300 per $2,500 invested for any one-year period.

Statement one tells us the following:

Rate of return for investment J = 115/1,000 = 0.115 (since dividing by 1,000 means to move the decimal point three places to the left)

Rate of return for investment K = 300/2,500 = 3/25 = 12/100 = 0.12 (since dividing by 100 means to move the decimal point two places to the left)

We easily see that statement one provides us with the rate of return for both investments J and K. We see that K’s annual rate of return is greater that of J, so statement one is sufficient to answer the question. We can eliminate answer choices B, C, and E.

Statement Two Alone:

The annual rate of return for an investment of type K is 12 percent.

Because we do not have any information about the annual rate of return for investment J, statement two is not sufficient to answer the question.

Answer: A

Bunuel · Answer

SOLUTION

For which type of investment, J or K, is the annual rate of return greater?

(1) Type J returns $115 per $1,000 invested for any one-year period and type K returns $300 per $2,500 invested for anyone-year period. We can get the rates of both investments and compare them. Sufficient.

(2) The annual rate of return for an investment of type K is 12 percent. We know nothing about investment J. Not sufficient.

Answer: A.

sandy2105 · Answer

Statement 1 : 115/1000 < 300/2000 , sufficient 
Statement 2: of no use , insufficient 
IMO: A

Guest96 · Answer

Bunuel

Just wanted to highlight that there might be a typo in the question. Is the official question written in the same way? Please ignore this post otherwise

Bunuel · Answer

Edited the typo. Thank you!

jbjinx · Answer

I had one doubt on this question - will it not be essential to know the amount being invested as well? Say if the investment amount is $1000, investment J provides $115 return, however, investment K provides no return.

Bunuel · Answer

No, we don’t need to know the actual amount invested. The question is asking about  rate of return , which is always calculated per dollar invested, not based on how much someone chooses to invest.

Statement (1) already gives fixed returns per fixed amounts:

J gives $115 for every $1,000 invested 
 K gives $300 for every $2,500 invested

That’s enough to compute and compare the rates. The total investment amount doesn’t affect the rate.

Rashi23 · Answer

Bunuel , why do we not need to know whether it is Compound Interest or Simple interest case here? Is the absence of compunding factor making us assume it is a SI case or something else?

Bunuel · Answer

What could be compounded here? The rates are given for 1 year, so there's no need to worry about compounding.

For which type of investment, J or K, is the annual rate of return gre

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Data Sufficiency (DS) Questions

For which type of investment, J or K, is the annual rate of return gre

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards