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Assumptions with DS

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Assumptions with DS

by sukrant26 » Sun Apr 06, 2008 4:14 pm
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%







I thought the answer would be E, but the correct ans is C. The II mentions the rate of dividend, however doesnt mention whether $50 is the face value or the market value when the share was bought. Hence we dont know how to calculate it.

Though it is understood that one should not bring an external knowledge while resolving the question, but its standard that dividends are a function of face value.

Please help
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by torontogmat.com » Mon Apr 07, 2008 3:13 pm
I agree with you. Even if one ignores the normal way that dividends are paid in the real world and accepts that they are paid as a percentage of share value as stated in this question, we do not know what the share price was when the dividend was paid. E.

FYI, I feel very strongly that there is a logic error leading to incorrect reasoning and in turn an incorrect answer in the OG11 SC. Do the best preparation you can, and don't worry about the odd question like this one.

Good luck with your studies!
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