Common Information
Abdul, Bikram and Chetan are three professional traders who trade in shares of a company XYZ Ltd.
Abdul follows the strategy of buying at the opening of the day at 10 am and selling the whole lot at the close of the day at 3 pm.
Bikram follows the strategy of buying at hourly intervals: 10 am , 11 am, 12 noon, 1 pm and 2 pm, and selling the whole lot at the close of the day. Further, he buys an equal number of shares in each purchase.
Chetan follows a similar pattern as Bikram but his strategy is somewhat different. Chetan’s total investment amount is divided equally among his purchases.
The profit or loss made by each investor is the difference between the sale value at the close of the day less the investment in purchase.
The “return” for each investor is defined as the ratio of the profit or loss to the investment amount expressed as a percentage.
Q. |
Common Information Question: 5/5 Share price was at its highest at: Note: Use data from the previous question. |
✔ A. | 10 am |
✖ B. | 11 am |
✖ C. | 12 noon |
✖ D. | 1 pm |
✖ E. | Cannot be determined |
Solution:
Option(A) is correct
From the solution of the last question, we
can see that,
$x_1 > x_6 > x_5 > x_2$, $x_4 < x_6$ and $x_1 > x_3 > x_4$
$\therefore x_1$, i.e. the share price at 10 am, is the highest.
Hence, option A is the correct choice.