Leslie and Kerri

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Leslie and Kerri

by bharatv » Wed May 27, 2009 4:01 am
Over the last two years, who made more money investing in stock market, leslie or kerri?

(1) Leslie made an average return of 20% and Kerri made an average return of 5%.

(2) Kerri started with two times as much money as Leslie.

Can someone explain the steps?

OA - E

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by aj5105 » Wed May 27, 2009 4:24 am
I am getting the answer as [spoiler](C)[/spoiler]

:shock:

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by tdadic84 » Wed May 27, 2009 6:32 am
im also getting C...can someone explain please..

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by Jose Ferreira » Wed May 27, 2009 7:09 am
One of the most important tips I can offer on Data Sufficiency is to pay attention when the GMAT gives you a bit of information without calling much attention to it.

In this case, I am honing in on the fact that statement 1 talks about the "average" returns each person received.

To establish a lack of sufficiency, because the answer is E, we need to create a situation in which Leslie makes more and a situation in which Kerri makes more.

Scenario 1 - Leslie makes more
Leslie starts with $100 and makes 20% both years.
100(1.2)(1.2) = 144
Kerri starts with $200 and makes %5 both years.
200(1.05)(1.05) = 220.50

If we can come up with a scenario in which Leslie makes less that $20.50, then the answer must be E.

Scenario 2 - Kerri makes more
Leslie starts with $100. She loses 50% the first year and gains 90% the second year. We can do this, because the average of (-50) and (90) is 20.
100(.5)(1.9)= 95

In this scenario, she did average +20% returns, but she actually lost $5 over the two years.

The answer is E
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by aj5105 » Wed May 27, 2009 10:42 am
Jose,

I assumed values for L and K (K double than L). I calculated 20% for L and 5% for K. I doubled the values to get the amount for 2 years. For all values of L and K, I got L gaining more than K.

Sticking to the approach I have followed, how can I get (E) as the answer?