inertia2010 wrote:Hi,
Can someone please explain this?
If the total price of n equally priced shares of a certain stock was $12,000, what was the price per share of the stock?
(1) If the price per share of the stock had been $1 more, the total price of the n shares would have been $300 more.
(2) If the price per share of the stock had been $2 less, the total price of the n shares would have been 5% less.
Price per share = (total cost)/(number of shares) = 12,000/n.
To determine the price per share, we need to know the value of n.
Question rephrased: What is the value of n?
Statement 1: If the price per share of the stock had been $1 more, the total price of the n shares would have been $300 more.
Since the price of each share is increasing by $1, and the total increase is $300, there must be 300 shares.
Thus, n=300.
Sufficient.
Statement 2: If the price per share of the stock had been $2 less, the total price of the n shares would have been 5% less.
For the total price to decrease by 5%, the price of each share must decrease by 5% (since each share is priced equally).
A sneaky way to avoid algebra: If the correct answer is D, then statement 2 must confirm the value of n determined in statement 1. Let's check:
If n=300, the price per share = 12,000/300 = 40.
5% of 40 is 2.
This works: a 5% reduction in the price per share = $2.
Thus, we know that n=300. If the number of shares is greater than or less than 300, then the price per share will change, and reducing the price by $2 will not result in a 5% decrease.
Sufficient.
The correct answer is
D.
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