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by quantskillsgmat » Fri Jan 27, 2012 1:52 am
A certain portfolio consist of 5 stocks, priced at $20, $35, $40, $45 and $70 respectively.on a given day one price increases by 15% and other decreases by 35% remaining three prices are unchanged.If avg price of stock rose by 2% approx, which of the following could be prices of unchanged shares.
a)20,35,40
a)35,40,70
c)20,45,70
d)20,35,70
e)35,40,45
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by GMATGuruNY » Fri Jan 27, 2012 7:06 am
quantskillsgmat wrote:A certain portfolio consist of 5 stocks, priced at $20, $35, $40, $45 and $70 respectively.on a given day one price increases by 15% and other decreases by 35% remaining three prices are unchanged.If avg price of stock rose by 2% approx, which of the following could be prices of unchanged shares.
a)20,35,40
a)35,40,70
c)20,45,70
d)20,35,70
e)35,40,45
Use reason.
The increase in one price (15%) is LESS THAN HALF the decrease in another price (35%), yet the NET increase is 2%.
Thus, the price that increases must be MUCH HIGHER than the price that decreases.
Only $70 and $20 are sufficiently far apart, implying that the other 3 prices (35,40,45) do not change.

The correct answer is E.
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