The price fluctuations of 4 scrips in a stock market in the four quarters of a year are shown in the table below. Four different investors had the following portfolios of investment in the four companies throughout the year : Portfolios > Investor 1 : 10

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Q: 146 (IAS/1995)
The price fluctuations of 4 scrips in a stock market in the four quarters of a year are shown in the table below. Four different investors had the following portfolios of investment in the four companies throughout the year :

Portfolios
Investor 1 : 10 of A, 20 of B, 30 of C and 40 of D
Investor 2 : 40 of A, 10 of B, 20 of C and 30 of D
Investor 3 : 30 of A, 40 of B, 10 of C and 20 of D
Investor 4 : 20 of A, 30 of B, 40 of C and 10 of D
Stock Market Performance
I QuarterII QuarterIII QuarterIV Quarter
Scrip AUp 10%Down 15%Up 10%Down 10%
Scrip BUp 2%Up 1%Up 2%Up 2%
Scrip CUp 1%Up 1%Down 5%Down 1%
Scrip DUp 20%Down 15%Up 30%Down 10%

question_subject: 

Logic/Reasoning

question_exam: 

IAS

stats: 

0,7,16,10,7,2,4

keywords: 

{'stock market': [0, 1, 0, 0], 'different investors': [0, 1, 0, 0], 'investor': [0, 0, 0, 1], 'portfolios': [0, 1, 1, 0], 'best investment': [0, 1, 0, 0], 'investment': [0, 0, 0, 1], 'net loss': [0, 1, 0, 0], 'price fluctuations': [0, 1, 0, 0], 'companies': [0, 0, 0, 1], 'table': [0, 0, 1, 0]}

The correct answer is Option-2 i.e., Investor 1 has made the best investment. Here is why:

Option-1 suggests that Investor 2 made the best investment. But if you consider investor 2`s portfolio which is highly weighed towards Scrip A and D. Despite some gains, Scrip A and D also have severe drops that will greatly affect the performance.

Option-3 contends that Investor 2 suffered a net loss during the year. To conclude this one needs to do intricate calculations about net gain or loss for every investor.

Option-4 states that Investor 3 suffered a net loss during the year. This too, requires thorough calculations to affirm.

Now, if we look at the correct option, Option-2, implying that Investor 1 has made the best investment. It is highly probable because Investor 1 has the largest amount of his investment in Scrip D, which has performed significantly with substantial gains of 20% and 30% in different quarters of the year. This led to his portfolio outperforming the others and thus, he has made the best investment.

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