Logical Reasoning Discussion

**Common Information**

Venkat, a stockbroker, invested a part of his money in the stock of four companies - A, B, C and D. Each of these companies belonged to different industries, viz., Cement, Information Technology (IT), Auto, and Steel, in no particular order.

At the time of investment, the price of each stock was Rs.100. Venkat purchased only one stock of each of these companies. He was expecting returns of $20\%$, $10\%$, $30\%$, and $40\%$ from the stock of companies A, B, C and D, respectively.

Returns are defined as the change in the value of the stock after one year, expressed as a percentage of the initial value. During the year, two of these companies announced extraordinarily good results. One of these two companies belonged to the Cement or the IT industry, while the other one belonged to either the Steel or the Auto industry.

As a result, the returns on the stocks of these two companies were higher than the initially expected returns. For the company belonging to the Cement or the IT industry with extraordinarily good results, the returns were twice that of the initially expected returns.

For the company belonging to the Steel or the Auto industry, the returns on announcement of extraordinarily good results were only one and a half times that of the initially expected returns. For the remaining two companies, which did not announce extraordinarily good results, the returns realized during the year were the same as initially expected.

Q. |
What is the minimum average return Venkat would have earned during the year? |

✔ A. |
$30\%$ |

✖ B. |
$35\%$ |

✖ C. |
$32.5\%$ |

✖ D. |
Cannot be determined |

**Solution:**

Option(**A**) is correct

At the time of investment, the total price of the four stocks was Rs. 400

Total expected returns $= (20 + 10 + 30 + 40)$

$= \text{Rs. }100$

Venkat would earn the minimum average return when the companies with the two lowest expected returns would give 2 times and 1.5 times their expected returns.

Thus, minimum expected returns,

$= 20 \times 1.5 + 10 \times 2 + 30 + 40$

$= \text{Rs.}120$

$= 30\% \text{ of initial investment}$

Hence, **option A** is the correct choice.

**Avani**

*()
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The ans is wrong it shud be 20