This is from tough problems..

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StarDust845: Master | Next Rank: 500 Posts; Posts: 158; Joined: Mon Dec 03, 2007 8:32 am; Thanked: 7 times

by StarDust845 » Thu Dec 27, 2007 2:40 pm

What does dividend mean?

Thanks,
Calista.

8. A person buys a share for $ 50 and sells it for $ 52 after a year. What is the total profit made by him from the share?
(I) A company pays annual dividend
(II) The rate of dividend is 25%
(A) Statement (I) ALONE is sufficient, but statement (II) alone is not sufficient
(B) Statement (II) ALONE is sufficient, but statement (I) is not sufficient
(C) BOTH statements TOGETHER are sufficient, but NEITHER statement alone is sufficient
(D) Each statement ALONE is sufficient
(E) Statements (I) and (II) TOGETHER are NOT sufficient

Source: Beat The GMAT — Data Sufficiency | Thu Dec 27, 2007 2:40 pm

sankruth: Master | Next Rank: 500 Posts; Posts: 195; Joined: Sun Oct 21, 2007 4:33 am; Thanked: 10 times

by sankruth » Thu Dec 27, 2007 3:38 pm

Dividend is the payment made by the stock issuer (company) to its shareholders. Dividend can be paid as cash or additional stock.

Coming to this question, A is not sufficient, which eliminates D too.

B is not sufficient as it does not specify the term of payment.

Also, it is not clear if the dividend is paid as stock or cash. C is not good

I would go for E.

But, is this a real GMAT question? The question is very ambiguous

StarDust845: Master | Next Rank: 500 Posts; Posts: 158; Joined: Mon Dec 03, 2007 8:32 am; Thanked: 7 times

by StarDust845 » Thu Dec 27, 2007 6:58 pm

Thanks for the effort.

Well, I don't know whether it's real GMAT question. It is from the tough_math questions, which is there in GMAT resources.

Calista.

Last edited by StarDust845 on Fri Dec 28, 2007 7:20 am, edited 1 time in total.

sujaysolanki: Master | Next Rank: 500 Posts; Posts: 214; Joined: Wed Nov 14, 2007 6:30 am; Thanked: 15 times

by sujaysolanki » Thu Dec 27, 2007 11:19 pm

1. No rate is given.
INSUFFICIENT.

2. Rate is 25% but you do not know how often the dividend is paid.
INSUFFICIENT.

Combining both, 25% annual dividend is paid. You can calculate the dividend and profit.

Hence C

camitava: Legendary Member; Posts: 645; Joined: Wed Sep 05, 2007 4:37 amFollowed by: 5 members; Location: India; Thanked: 34 times

by camitava » Thu Dec 27, 2007 11:45 pm

Agree with Sujay! Sankruth, I think u have gone too far to calculate the dividend and the principal amount. I think here dividend means some % added to ur stock. So IMO C.

Correct me If I am wrong

Regards,

Amitava

joefreddy: Senior | Next Rank: 100 Posts; Posts: 30; Joined: Sat Aug 04, 2007 2:58 am

by joefreddy » Fri Dec 28, 2007 7:24 pm

But I thought divident was paid on face value of the share. so without knowing the face value of the share we will not know how much dividend was paid...we just know the %. face value could be 1, 5, 10 or anyvalue....pls clarify if i am wrong.

rajivmatta: Newbie | Next Rank: 10 Posts; Posts: 7; Joined: Thu Dec 20, 2007 4:32 pm

by rajivmatta » Sat Dec 29, 2007 2:43 pm

joefreddy wrote:But I thought divident was paid on face value of the share. so without knowing the face value of the share we will not know how much dividend was paid...we just know the %. face value could be 1, 5, 10 or anyvalue....pls clarify if i am wrong.

IMO C..
4% capital Gains and 25% dividend..I agree that dividend is issued at face value..but in that scenario we may have to appropriately define Profit as well...Profit would be %Gain+ Dividend - %Capital gains tax - transcation fees-etc-etc...I think we can safely assume that we do not need to go into that much details....I think its fair to say C..I could be wrong though

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