GMAT Practice Question: The price of a certain stock increased by 0.25 of 1 percent on a certain day. By what fraction...
Question
The price of a certain stock increased by 0.25 of 1 percent on a certain day. By what fraction did the price of the stock increase that day?
- \frac{1}{2,500}
- \frac{1}{400}
- \frac{1}{40}
- \frac{1}{25}
- \frac{1}{4}
Topics: fractions, percentages, conversions
Solution
Step 1
We first multiply 0.25 by 1% to find the percentage increase.
0.25 \times 1\% = 0.25\%
Step 2
We next express this percentage as a fraction of 1 by dividing by 100.
0.25\% = \frac{0.25}{100}
Step 3
We then write 0.25 as a fraction and combine it with the division by 100.
0.25 = \frac{25}{100} \frac{0.25}{100} = \frac{\frac{25}{100}}{100} = \frac{25}{100} \times \frac{1}{100}
Step 4
We simplify the resulting fraction by canceling the common factor.
= \frac{\cancel{25}}{\cancel{25} \times 4 \times 100} = \frac{1}{400}
Answer
The stock price increased by \frac{1}{400}, so the correct answer is Choice B.
