An investor purchased 100 shares of stock X at 6 1/8 dollars per share and sold them all a year later at 24 dollars per

This topic has expert replies
Moderator
Posts: 5999
Joined: 07 Sep 2017
Followed by:20 members

An investor purchased 100 shares of stock X at 6 1/8 dollars per share and sold them all a year later at 24 dollars per

by BTGmoderatorDC » Mon Sep 13, 2021 7:49 pm

00:00

A

B

C

D

E

Global Stats

An investor purchased 100 shares of stock X at 6 1/8 dollars per share and sold them all a year later at 24 dollars per share. If the investor paid a 2 percent brokerage fee on both the total purchase price and the total selling price, which of the following is closest to the investor's percent gain on this investment?

(A) 92%
(B) 240%
(C) 280%
(D) 300%
(E) 380%

OA C

Source: GMAT Prep

Legendary Member
Posts: 2035
Joined: 29 Oct 2017
Followed by:6 members

Re: An investor purchased 100 shares of stock X at 6 1/8 dollars per share and sold them all a year later at 24 dollars

by swerve » Tue Sep 14, 2021 6:52 am
BTGmoderatorDC wrote:
Mon Sep 13, 2021 7:49 pm
An investor purchased 100 shares of stock X at 6 1/8 dollars per share and sold them all a year later at 24 dollars per share. If the investor paid a 2 percent brokerage fee on both the total purchase price and the total selling price, which of the following is closest to the investor's percent gain on this investment?

(A) 92%
(B) 240%
(C) 280%
(D) 300%
(E) 380%

OA C

Source: GMAT Prep
The formula for percentage change is:

$$\dfrac{\text{new}}{\text{old}} - 1$$

$$\text{new} = 24\ast 0.98 \Rightarrow 24\ast \dfrac{49}{50}$$

$$\text{old} =6\dfrac{1}{8} \ast 1.02 \Rightarrow \dfrac{49}{8} \ast \dfrac{51}{50}$$

$$\dfrac{\text{new}}{\text{old}} \ast \dfrac{8 \ast 50}{8\ast 50}=\dfrac{192\ast 49}{49\ast 51}=\dfrac{192}{51}=\dfrac{384}{102}$$

So the approximate percentage gain the investor made is slightly less than $$384\% - 100 \% = 284\%$$

Therefore, C

• Page 1 of 1