Last visit was: 23 Apr 2026, 07:57 It is currently 23 Apr 2026, 07:57
Home
Messages
Tests
Schools
Events
Close
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Go to My Error Log Learn more
Close
Request Expert Reply
Confirm Cancel
Back to Forum
Create Topic
   1   2   3   
705-805 (Hard)|   Math Related|         
User avatar
rianaamy
User avatar
Joined: 18 Aug 2016
Last visit: 23 Apr 2026
Posts: 52
Own Kudos:
32
 [1]
Given Kudos: 20
Location: Bangladesh
Posts: 52
Kudos: 32
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 26 Dec 2025, 23:35
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Optimistic-5% gain on 2400 gives 120 each year, 240 gain in 2 years. To get a net gain of 600, 360 more is needed. 3% simple interest on 6000 bond gives 360 gain in 2 years.

Pessimistic- 10% decrease in market price each year on 2400 means a new price in two years of 0.9×0.9×2400=1944 with a net loss 2400-1944=456

To get a net gain of 600, the loss recovery should be added, so a gain of 600+456=1056 is needed with a gain each year of 528

A 3% simple interest on 17600 (0.03×17600=528) each year can give this gain. So at least 18000 should be invested each year.

Answer 6000. 18000
User avatar
arnab24
User avatar
Joined: 16 Jan 2024
Last visit: 25 Feb 2026
Posts: 96
Own Kudos:
81
 [1]
Given Kudos: 7
Location: India
Schools: ISB '26
GPA: 8.80
Products:
Forum Quiz
Schools: ISB '26
Posts: 96
Kudos: 81
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 00:32
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Let's take each scenario , under optimistic , gain from certificates will be 2*(0.05*2400) = $240. From Bond , he needs to gain $360 to reach goal.

So , 360=P*3*2/100 , P= $6000.

Under Pessimistic Scenario , loss from certificates will be 2*(0.1*2400)=$480. Gain from Bond should be $1080.

So , 1080 = P*3*2/100 , P=$18000

So , Answer is Bond Optimistic: $6000 , Bond Pessimistic : $18000
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
gchandana
User avatar
Joined: 16 May 2024
Last visit: 23 Apr 2026
Posts: 192
Own Kudos:
141
 [1]
Given Kudos: 170
Location: India
Products:
GMAT Club Tests Forum Quiz
Posts: 192
Kudos: 141
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 01:16
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Optimistic:
5% of 2400 is 120. For two years, it will be 240. So, the remaining 360, we need to get from the bond in 2 yrs at 3% simple interest. Then, 180 for 1 year, which is 3% of the investment.
The amount to be invested in the bond will be 6000.

Pessimistic:
10% of 2400 is 240, 480 loss for 2 years. So we need 480+600=1080 from the bond. Then, 540 for 1 year, which is 3% of the investment. Investment will be 18000
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
thuckhang
User avatar
Joined: 29 Apr 2025
Last visit: 18 Mar 2026
Posts: 22
Own Kudos:
19
 [1]
Given Kudos: 19
Posts: 22
Kudos: 19
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 02:15
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Market value investment intially: 2,400$
Bond investment, simple interest 3%: x
Outcome: gain $600 after 2 years
1. Upside: +5% per year, 2 year, simple rate
- Total gain: 2,400*0.05*2=+240$
- Remaining goal: 600-240=480 - this should be remaining gain from bodn investment
- Bond investment: 480/3%*2 = 6,000
2. Downside: -10% per year, 2 year, simple rate
- Total gain: 2,400*10%*2=-480$ (I usually mess up with percent and rate so I keep it simple here, but welcome for more shorcuts)
- Remaining goal: 600-(-480)=1080
- Bond investment: 1080/3%*2=18,000
User avatar
jkkamau
User avatar
Joined: 25 May 2020
Last visit: 23 Apr 2026
Posts: 226
Own Kudos:
190
 [1]
Given Kudos: 142
Location: Kenya
Schools: Haas '25
GMAT 1: 730 Q50 V46
GPA: 3.5
Schools: Haas '25
GMAT 1: 730 Q50 V46
Posts: 226
Kudos: 190
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 02:26
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Under optimistic projection the certificate value grows by 5%x2400x2= 240
To attain the target amount of 600 the investor has to generate = 600-240 = 360 from the bond
Let the bond amount be A
So AX3/100x2=360
6x=36000
X= 6000
Under the pessimistic projection the certificate value declines by 10/100x2400X2= 480
To attain the target amount of 600 the investor has to recoup the loss from the bond and earn another 600 meaning he needs an 1080 gain
So BX3/100X2=1080
6X=108000
X=18000
Ans 6,000 (optimistic) and 18,000 (Pessimistic)
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
truedelulu
User avatar
Joined: 01 Sep 2025
Last visit: 24 Jan 2026
Posts: 81
Own Kudos:
70
 [1]
Given Kudos: 16
Products:
Forum Quiz
Posts: 81
Kudos: 70
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 02:34
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Earning from bond = Bond*0.03*2 = 0,06Bond
For certificates:
- Positive view: +0.05*2,400*2 = +240
- Negative view: -0.1*2,400*2 =-480
Net gain = $600

=> Positive view: 600=0,06Bond+240 => Bond = 6,000
Negative view: 600=0,06Bond-480 => Bond = 18,000


Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
Gmat860sanskar
User avatar
Joined: 05 May 2023
Last visit: 23 Apr 2026
Posts: 212
Own Kudos:
113
 [1]
Given Kudos: 79
Schools: ISB '26
GMAT Focus 1: 605 Q82 V78 DI80
Products:
GMAT Club Tests Forum Quiz
Schools: ISB '26
GMAT Focus 1: 605 Q82 V78 DI80
Posts: 212
Kudos: 113
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 02:40
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
We have two scenarios

1st : Optimistic - Bond investment :

Market value of certificates increases 5% every year (Simple interest)

2400 * 5/100 * 2 = 240

So remaining 600 -240 = 360, we need from bonds

R * 3/100 * 2 = 360

R = 6000


2nd : Pessimistic - Bond Investment

Market value of certificate decreases 10 %

2400 * 80/100 = 1920

2400 - 1920 = 480

So for gaining net gain of 600, we need 1080 ( 600 + 480) from bonds

R * 3/100 * 2 = 1080

R = 18000

So our answer is 6000 and 18000
User avatar
msignatius
User avatar
Joined: 28 Aug 2025
Last visit: 09 Apr 2026
Posts: 131
Own Kudos:
98
 [1]
Given Kudos: 31
Location: India
Concentration: Strategy, Marketing
Schools: ISB '27 NUS '26 INSEAD Jan '26 (S) IESE '26 (D) HEC (S) IMD ESADE'26 Judge '26 LBS '27
GMAT Focus 1: 705 Q86 V85 DI84
GPA: 3.5
WE:Marketing (Consulting)
Products:
My Reviews
Schools: ISB '27 NUS '26 INSEAD Jan '26 (S) IESE '26 (D) HEC (S) IMD ESADE'26 Judge '26 LBS '27
GMAT Focus 1: 705 Q86 V85 DI84
Posts: 131
Kudos: 98
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 03:04
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
The quickest way to do this is to figure out, first, what all will go towards the investor's goal.

"Earn $600 from two investments after 2 years" it says.

From this we know, we need a total of $600 earning.

Two investments will work towards that goal:

- A no-interest certificate that is locked-in for 2 years. This will be sold at a profit or loss at the end of the lock-in period.
- An investment into the treasury bond, that will give a yearly return - simple interest - of 3$ over the same first invested. This is a guaranteed profit of 3%, so its quantum will be key to offset the loss or profit from the sale of the no-interest certificate.

Now, we have two projections highlighting how the no-interest certificate will perform:

There is an optimistic projection, of a 5% yearly increase in market value (or $120 dollars to the $2400), which over two years, imply a $240 profit on the bond. Now, the total goal after two years is $600, so hence, the remaining $360 ($600 minus $240 that the no-interest certificate will deliver) will need to be made on the treasury bond. This is a 3% simple interest a year. And as the interest will add up over two years, the $360 / 2 = $180 will be the profit within one year, which will equal to 3$ of the investment. 1% of the investment makes 180/3 = $60. So 100% will equate $6,000 investment. Mark that as the answer.

For the pessimistic projection, we, in fact, see a 10$ decrease in the $2400 certificate purchase price each year. That's a 240*2 = $480 decrease over two years. Hence, we're also at a $480 loss, and to turn this into a $600 profit, we'll need the bond to make us $600 + $480 = $1080. Each year, that bond profit will need to be $1080 / 2 = $540. When $540 is 3% of a certain value, that value itself is 540/3*100 = $18,000. That is your investment in the pessimistic scenario, so mark that as the answer.
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
Dereno
User avatar
Joined: 22 May 2020
Last visit: 23 Apr 2026
Posts: 1,398
Own Kudos:
1,373
 [1]
Given Kudos: 425
Products:
GMAT Club Tests
Posts: 1,398
Kudos: 1,373
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 03:14
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more

Net gain in 2 years = $600 = Gain from treasury bond + Gain from certificate.

There are two modes, optimistic mode and pessimistic mode.

Under Optimistic mode:

$2400 invested in certificates , increase by a fixed amount of 5% each year on the purchase price.

So, 5% * (2400) = $120 per year.

For two years , it’s $240.

Investment in Treasury Bond :

Let x be the amount invested in treasury bond. Then, 3% simple interest for 2 years.

Gain = $x * 3%*2 = $0.06x

Net gain ( Optimistic mode ) = $240 + $ 0.06x = $600

$ 360 = $ (6/100)*x

x = $ 6000.


Under Pessimistic mode:

$2400 invested , decreases by 10% each year.

So, the decreased amount = $240 per year. And $240*2 = - $480

Bond gain = $ 0.06x

Net gain = $0.06x - $480

600 = $0.06x - 480

0.06x = 1080

x = 108000/6

= 18000.


Optimistic mode : 6000

Pessimistic mode : 18000
User avatar
harishg
User avatar
Joined: 18 Dec 2018
Last visit: 09 Apr 2026
Posts: 176
Own Kudos:
174
 [1]
Given Kudos: 31
GMAT Focus 1: 695 Q88 V84 DI81
Products:
My Reviews
GMAT Focus 1: 695 Q88 V84 DI81
Posts: 176
Kudos: 174
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 03:37
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
In the optimistic scenario, 5% is returned every year which amounts to 240. We still need 600-240=360 from the bond investment over two years or 180 in one year

If x is invested in the bond, x*3/100=180 or x =6000

In the pessimistic scenario, every year 240 is lost. 480 has to be recouped along with 600 over two years, or 1080 over two years and 540 every year.

x*3/100= 540 or x = 18000

Therefore, Bond investment, optimistic = 6000 and Bond investment, pessimistic = 18000
User avatar
linnet
User avatar
Joined: 11 Dec 2025
Last visit: 22 Jan 2026
Posts: 81
Own Kudos:
42
 [2]
Given Kudos: 1
Posts: 81
Kudos: 42
 [2]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 04:02
2
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Certificate value change
Optimistic: each year= 5% x 2400=120
In 2 yrs= 120 x 2 = 240 gain
Pessimistic; Each year decrease= 10% x 2400= 240
In 2 yrs= 240x2 = 480 loss
Required bond gain: Optimistic - 600-240 = 360
Pessimistic: 600+480= 1080
Bond investment for 2 yrs
Optimistic = X , interest = 6%
6% * X =360 = 0.06X=360
X=360/0.06= 6000
Pessimistic = Y, interest = 6%
6% * Y=1080= 0.06Y=1080
Y=1080/0.06= 18000

Final Answer: Bond investment; Optimistic= 6000
Pessimistic = 18,000
User avatar
MANASH94
User avatar
Joined: 25 Jun 2025
Last visit: 22 Apr 2026
Posts: 89
Own Kudos:
63
 [1]
Given Kudos: 16
Location: India
Schools: IIM IIM ISB
GPA: 2.9
Schools: IIM IIM ISB
Posts: 89
Kudos: 63
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 04:04
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Defining variables Certificate purchase = $2,400
Bond investment = x (to be determined)
Bond earns 3% simple interest per year
Goal: combined net gain of $600 after 2 years
Optimistic certificate scenario: gains 5% of $2,400 per year
Pessimistic certificate scenario: loses 10% of $2,400 per year

Calculating certificate gains/losses =>
Optimistic: Gain per year = 5% of $2,400
= 120 Over 2 years: 2 × 120
= 240 2×120=240

Pessimistic: Loss per year = 10% of $2,400 = 240
Over 2 years: 2 × 240 = 480
2×240=480 loss

Expressing bond gains Bond earns 3% simple interest per year : 2-year gain = 2 * 0.03 * x =0.06x

Writing equations for total net gain:
Net gain = Certificate gain + bond gain = $600
Optimistic: Certificate gain + Bond gain = 600
240+0.06x=600
0.06x=600−240=360
x = 360 / 0.06 = 6000

Optimistic bond investment = $6,000

Pessimistic: Certificate gain + Bond gain = 600 Certificate gain + Bond gain= 600 Certificate loses $480 :
net gain = bond gain - 480 = 600 : 0.06x - 480 = 600
0.06 x = 600 + 480 = 1080
x=1080/0.06=18,000
Pessimistic bond investment = $18,000

Answer Optimistic: $6,000 and Pessimistic: 18,000
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
750rest
User avatar
Joined: 27 Jul 2022
Last visit: 23 Apr 2026
Posts: 46
Own Kudos:
34
 [1]
Given Kudos: 1,126
Concentration: Marketing, Operations
Products:
My Reviews
Posts: 46
Kudos: 34
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 04:21
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
In case optimistic investment the earning from interest cirtificate in 2 years is 2400*5/100*2 = 240 so he need additional 360 from bond investment so 360 = X * 3/100 *2 ----> so investment required is X = 6000.

In case of pessimistic investment loss from interest certificate is 2400*10/100*2 = 480 so he need additional 1080 from bond investment.

let investment required is X so 1080 = X*3/100*2 ---> X = 18000
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
Reon
User avatar
Joined: 16 Sep 2025
Last visit: 28 Mar 2026
Posts: 134
Own Kudos:
121
 [1]
Given Kudos: 4
Posts: 134
Kudos: 121
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 04:22
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

Certificate price is $2400.
Optimistic:
Certificta price increase in 1 year = (5/100)2400= 120
120 in year, then 240 in 2 years.
Needed bond gain to reach the target net gain = 600-240= 360
Bond earns 3% SI per year or 6% over two years = 360/0.06= $6000

Pessimistic:
Certificta price decrease in 1 year = (10/100)2400= 240
-240 in 1 year, then -480 in 2 years.
Needed bond gain to reach the target net gain = 600-(-480)= $1080
Bond earns 3% SI per year or 6% over two years = 1080/0.06= $18000

Bond investment, optimistic= $6000
Bond investment, pessimistic= $18000
User avatar
Rahilgaur
User avatar
Joined: 24 Jun 2024
Last visit: 26 Jan 2026
Posts: 162
Own Kudos:
125
 [1]
Given Kudos: 47
GMAT Focus 1: 575 Q81 V82 DI72
Products:
My Reviews
GMAT Focus 1: 575 Q81 V82 DI72
Posts: 162
Kudos: 125
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 05:17
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.
The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.


Optimistic -

2 year interest from bond = 0.05*2400*2 = 240

Remaining earning to gain total 600$ = 600-240 = $360

Let's consider x amount was invested with 3% SI for 2 years => Total gain should be 360$

SI of 2 years = x*0.03*2 = 360

x=12000/2 = $ 6000

Pessimistic -

Total loss on bond in 2 years = 0.1*2400*2 = $ 480

Remaining earning to gain total $ 600 = 600+480 = 1080..

Let's consider y amount to be invested @ 3% SI for 2 years

y*0.03*2 = 1080 ---> y=36000/2 = 18000 $
User avatar
Rishm
User avatar
Joined: 05 May 2024
Last visit: 22 Apr 2026
Posts: 244
Own Kudos:
22
Given Kudos: 67
Location: India
Schools: Johnson '27 LBS '27 IESE '27
GPA: 10
WE:Consulting (Consulting)
Products:
Forum Quiz
Schools: Johnson '27 LBS '27 IESE '27
Posts: 244
Kudos: 22
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 05:41
Kudos
Add Kudos
Bookmarks
Bookmark this Post
he needs 360 dollars in optimistic investment and 1080 in pessimistic investment to ensure 600 dollars is crossed, just use the formula to calculate the return required with the options given and u will get 6k and 18k as options, considering 240 earned during 2 years optimistic investment of the certificate and lost 480 dollars lost due to pessimistic vibes.
User avatar
prepapr
User avatar
Joined: 06 Jan 2025
Last visit: 22 Apr 2026
Posts: 92
Own Kudos:
82
 [1]
Given Kudos: 5
GMAT Focus 1: 615 Q85 V80 DI77
GMAT Focus 1: 615 Q85 V80 DI77
Posts: 92
Kudos: 82
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 06:21
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Let b be the amount he invests in bond. So after two years, he gets b*0.03*2 = 0.06b
Given that the certificates are worth 2400$ he is holding for 2 years.

Under optimistic projection,
each year the value of certificates increase by 5% of 2400 = 120
So gain = 240
Since the total gain needs to be 600$, the rest 360$ should come from the bond.
So 0.06b = 360, b = 6000

Under pessimistic projection,
each year the value of certificates decrease by 10% of 2400 = 240
So loss = 480
To get the total gain = 600$, we need 600 + 480 = 1080 to be gained from the bond
0.06b = 1080, b = 18000

So,
bond investment under optimistic = 6000$
bond investment under pessimistic = 18000$
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
firefox300
User avatar
Joined: 15 Dec 2025
Last visit: 27 Dec 2025
Posts: 90
Own Kudos:
87
 [1]
Posts: 90
Kudos: 87
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 06:44
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
600 after 2 years -> 300 per year
bond: 3% of Amount = 0.03*Amount

Optimistic projection
certificates increases 5% = 120
120 + 0.03*Amount = 300
Amount=6000

Pessimistic projection
certificates decreases 10% = 240
-240 + 0.03*Amount = 300
Amount=18000

Bond investment, optimistic=6000 and Bond investment, pessimistic=18000
User avatar
sanjitscorps18
User avatar
Joined: 26 Jan 2019
Last visit: 03 Mar 2026
Posts: 723
Own Kudos:
741
 [1]
Given Kudos: 130
Location: India
Schools: IMD'26
Products:
My Reviews
Schools: IMD'26
Posts: 723
Kudos: 741
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 07:01
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Certificate price = $2400

Optimistic gain = 5% then we have 2400*5% = 120
For 2 years we get 120 + 120 = 240

Pessimistic loss = -10% we have 2400*-10% = -240
For two years we get -240 -240 = -480

Let say the amount invested in bonds is 'a'
Treasury bond gives 3%

For Optimistic part
a*0.03*2 + 240 = 600
=> 0.06a = 360
=> a = 6000

For pessimistic part
a*0.03*2 - 480 = 600
=> 0.06a = 1080
=> a = 18000

Optimistic = 6000
Pessimistic = 18000
Bunuel
Gift
12 Days of Christmas Competition
This question is part of our holiday event
Win $40,000 in prizes: courses, tests, and more


An investor purchases a no interest certificate that he cannot sell for 2 years. He buys certificates with a total purchase price of $2,400. At the same time, he invests an additional sum in a treasury bond that earns 3% simple interest per year.

The investor’s goal is a combined net gain of $600 from the two investments after 2 years.

Two analysts give different projections for how the certificate’s market value will change over the two years. Under the optimistic projection, each year the market value increases by a fixed amount equal to 5% of the original $2,400 purchase price. Under the pessimistic projection, each year the market value decreases by a fixed amount equal to 10% of the original $2,400 purchase price.

In the table, select for Bond investment, optimistic the amount the investor must invest in the bond to reach the $600 goal under the optimistic scenario, and select for Bond investment, pessimistic the amount the investor must invest in the bond to reach the $600 goal under the pessimistic scenario. Make only two selections, one in each column.
Show more
User avatar
topgmat25
User avatar
Joined: 15 Dec 2025
Last visit: 05 Jan 2026
Posts: 90
Own Kudos:
87
 [1]
Posts: 90
Kudos: 87
 [1]
12 Days of Christmas GMAT Competition 2025 - Day 10: An investor 27 Dec 2025, 07:10
1
Kudos
Add Kudos
Bookmarks
Bookmark this Post
Optimistic
With certificate he gains 0.05*2400 = 120 per year -> 2*120=240
600-240=360 that he must gain with the bond, 180 per year
0.03X=180
X=6000

Pessimistic
With certificate he loses 0.1*2400 = 240 per year -> 2*240=480
600-(-480)=1080 that he must gain with the bond, 540 per year
0,03X=540
X=18000

Bond investment, optimistic=6000
Bond investment, pessimistic=18000
   1   2   3   
Moderators:
Bunuel
Math Expert
109778 posts
kingbucky
498 posts
Gmat860sanskar
212 posts