• NEW! FREE Beat The GMAT Quizzes
    NEW! FREE Beat The GMAT Quizzes
    NEW! FREE Beat The GMAT Quizzes
    Hundreds of Questions Highly Detailed Reporting Expert Explanations TAKE A FREE GMAT QUIZ
  • 7 CATs FREE!
    If you earn 100 Forum Points

    Engage in the Beat The GMAT forums to earn
    100 points for $49 worth of Veritas practice GMATs FREE

    Veritas Prep
    VERITAS PRACTICE GMAT EXAMS
    Earn 10 Points Per Post
    Earn 10 Points Per Thanks
    Earn 10 Points Per Upvote
    REDEEM NOW

in terms of k and m

This topic has 2 expert replies and 2 member replies

GMAT/MBA Expert

in terms of k and m

Post
Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m
B. (k - m)
C. [100 (k - m)]/ (100 + k)
D. [100 (k - m)]/(100 + m)
E. [100 (k - m)]/ (100 + k + m)



http://www.urch.com/forums/gmat-problem-solving

_________________
The mind is everything. What you think you become. –Lord Buddha



Sanjeev K Saxena
Quantitative Instructor
The Princeton Review - Manya Abroad
Lucknow-226001

www.manyagroup.com

  • +1 Upvote Post
  • Quote
  • Flag
Free GMAT Practice Test How can you improve your test score if you don't know your baseline score? Take a free online practice exam. Get started on achieving your dream score today! Sign up now.
Senior | Next Rank: 100 Posts
Joined
07 Mar 2011
Posted:
65 messages
Upvotes:
6
Target GMAT Score:
750+
Post
sanju09 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m
B. (k - m)
C. [100 (k - m)]/ (100 + k)
D. [100 (k - m)]/(100 + m)
E. [100 (k - m)]/ (100 + k + m)



http://www.urch.com/forums/gmat-problem-solving
Let initial price of a share is "p"
After increase -> p(1 +k/100)
Let initial earning is "e"
After increase -> e(1 +m/100)

percentage rise in price/earning ratio =>

[[{p(1 +k/100)}/{e(1 +m/100)} - (p/e)] / (p/e)]*100

= [(100+k)/100+m) -1]*100
= [100*(k-m)]/(100+m)

Answer D.

  • +1 Upvote Post
  • Quote
  • Flag
GMAT Instructor
Joined
17 Dec 2010
Posted:
1035 messages
Followed by:
364 members
Upvotes:
474
Post
You could also pick numbers for this one.

If the original price per share of Stock X = 100
Let's say k = 20
New price per share = 120

Original earnings per share of Stock X = 100
Let's say m = 5 (since k > m)
New earnings per share = 105

Old ratio of price/earnings = 100/100 = 1
New ratio of price/earnings = 120/105 = approx 1.14

The percent increase is approx 14%.

Plug in our numbers into the answer choices, and look for the choice that also yields 14%:

A. k/m = 20/5 = 4 too small

B. (k - m) = 20 - 5 = 15 too big

C. 100 (15) / 100 + 20 = 1500 / 120 = 12.5 too small

D. 100 (15) / 100 + 5 = 1500/105 = approx 14. CORRECT!

E. 100 (15) / 100 + 20 + 5 = 1500/125 = 12

_________________
Vivian Kerr
GMAT Rockstar, Tutor
https://www.GMATrockstar.com
https://www.yelp.com/biz/gmat-rockstar-los-angeles

Former Kaplan and Grockit instructor, freelance GMAT content creator, now offering affordable, effective, Skype-tutoring for the GMAT at $150/hr. Contact: GMATrockstar@gmail.com

Thank you for all the "thanks" and "follows"! Smile

  • +1 Upvote Post
  • Quote
  • Flag

GMAT/MBA Expert

Post
sanju09 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m
B. (k - m)
C. [100 (k - m)]/ (100 + k)
D. [100 (k - m)]/(100 + m)
E. [100 (k - m)]/ (100 + k + m)
One approach is to plug in values.

Let $100 be the original price per share of Stock X
Choose a "nice" value for k. How about k = 200
So, after a 200% increase, the new price per share = $300

Let $100 be the original earnings per share of Stock X
Choose a "nice" value for m. How about m = 100
So, after a 100% increase, the new earnings per share = $200

Original ratio of price/earnings = $100/$100 = 1
New ratio of price/earnings = $300/$200 = 1.5

By what percent did the ratio of price per share to earnings per share increase?
So, the percent increase (from 1 to 1.5) is 50%.
In other words, when k = 200 and m = 100, the ratio increases 50%

Now, plug in 200 for k, and 100 for m, and look for the answer choice that also yields 50%.

A. k/m = 200/100 = 2 (nope)

B. (k - m) = 200 - 100 = 100 (nope)

C. [100(k - m)] / (100 + k) = 10,000/300 = 33.333 (nope)

D. [100(k - m)] / (100 + m) = 10,000/200 = 50 GREAT!

E. [100(k - m)] / (100 + k + m) = 10,000/400 = 25 (nope)

Answer: D

Cheers,
Brent

_________________
Brent Hanneson – Creator of GMATPrepNow.com
Use my video course along with Beat The GMAT's free 60-Day Study Guide

Sign up for free Question of the Day emails
And check out all of these free resources

  • +1 Upvote Post
  • Quote
  • Flag
GMAT Prep Now's comprehensive video course can be used in conjunction with Beat The GMAT’s FREE 60-Day Study Guide and reach your target score in 2 months!
Post
sanju09 wrote:
Last year the price per share of Stock X increased by k percent and the earnings per share of Stock X increased by m percent, where k is greater than m. By what percent did the ratio of price per share to earnings per share increase, in terms of k and m?
A. k/m
B. (k - m)
C. [100 (k - m)]/ (100 + k)
D. [100 (k - m)]/(100 + m)
E. [100 (k - m)]/ (100 + k + m)
Let the initial price per share be x and the initial earnings per share be y. After the increase, price per share became x(1 + k/100) and earnings per share became y(1 + m/100). The initial ratio of price per share to earnings per share was x/y and it became [x(1 + k/100)]/[y(1 + m/100)]. Let’s apply the percent increase formula:

Percent increase = 100 * (new - old)/old

Percent increase = 100 * [[x(1 + k/100)]/[y(1 + m/100)] - x/y]/[x/y]

Let’s factor out x/y from the numerator and cancel with the denominator:

Percent increase = 100 * [(1 + k/100)/(1 + m/100) - 1]

Percent increase = 100 * [[(100 + k)/100]/[(100 + m)/100]] - 1

Percent increase = 100 * [[(100 + k)/100] * [100/(100 + m)]] - 1

Percent increase = 100 * [(100 + k)/(100 + m) - (100 + m)/(100 + m)]

Percent increase = 100 * [(100 + k - 100 - m)/(100 + m)]

Percent increase = 100 * (k - m)/(100 + m)

Answer: D

_________________

Scott Woodbury-Stewart
Founder and CEO
scott@targettestprep.com



See why Target Test Prep is rated 5 out of 5 stars on BEAT the GMAT. Read our reviews

  • +1 Upvote Post
  • Quote
  • Flag
  • Kaplan Test Prep
    Free Practice Test & Review
    How would you score if you took the GMAT

    Available with Beat the GMAT members only code

    MORE DETAILS
    Kaplan Test Prep
  • PrepScholar GMAT
    5 Day FREE Trial
    Study Smarter, Not Harder

    Available with Beat the GMAT members only code

    MORE DETAILS
    PrepScholar GMAT
  • Economist Test Prep
    Free Trial & Practice Exam
    BEAT THE GMAT EXCLUSIVE

    Available with Beat the GMAT members only code

    MORE DETAILS
    Economist Test Prep
  • Veritas Prep
    Free Veritas GMAT Class
    Experience Lesson 1 Live Free

    Available with Beat the GMAT members only code

    MORE DETAILS
    Veritas Prep
  • Varsity Tutors
    Award-winning private GMAT tutoring
    Register now and save up to $200

    Available with Beat the GMAT members only code

    MORE DETAILS
    Varsity Tutors
  • Target Test Prep
    5-Day Free Trial
    5-day free, full-access trial TTP Quant

    Available with Beat the GMAT members only code

    MORE DETAILS
    Target Test Prep
  • EMPOWERgmat Slider
    1 Hour Free
    BEAT THE GMAT EXCLUSIVE

    Available with Beat the GMAT members only code

    MORE DETAILS
    EMPOWERgmat Slider
  • The Princeton Review
    FREE GMAT Exam
    Know how you'd score today for $0

    Available with Beat the GMAT members only code

    MORE DETAILS
    The Princeton Review
  • Magoosh
    Magoosh
    Study with Magoosh GMAT prep

    Available with Beat the GMAT members only code

    MORE DETAILS
    Magoosh
  • e-gmat Exclusive Offer
    Get 300+ Practice Questions
    25 Video lessons and 6 Webinars for FREE

    Available with Beat the GMAT members only code

    MORE DETAILS
    e-gmat Exclusive Offer

Top First Responders*

1 Ian Stewart 41 first replies
2 Brent@GMATPrepNow 40 first replies
3 Scott@TargetTestPrep 39 first replies
4 Jay@ManhattanReview 32 first replies
5 GMATGuruNY 26 first replies
* Only counts replies to topics started in last 30 days
See More Top Beat The GMAT Members

Most Active Experts

1 image description Scott@TargetTestPrep

Target Test Prep

159 posts
2 image description Max@Math Revolution

Math Revolution

92 posts
3 image description Brent@GMATPrepNow

GMAT Prep Now Teacher

60 posts
4 image description Ian Stewart

GMATiX Teacher

50 posts
5 image description GMATGuruNY

The Princeton Review Teacher

37 posts
See More Top Beat The GMAT Experts