On a day of fluctuating market prices, the share price of XYZ Ltd. ends with a gain, i.e., it is higher at the close of the day compared to the opening value. Which trader got the maximum return on that day?
Explanation:
Since Chetan’s return is always higher than or equal to that of Bikram, the trader with the maximum return would be either Abdul or Chetan.
If it is a continuously rising market then Abdul would end up having the highest gain as seen in the example above.
But there might be a scenario when the share price of XYZ would go down after 10 AM and rise in the end at 3 PM to a higher value.
In such a case, if Chetan gets the shares at lower prices than what the price was at 10 AM he would end up making more profit and hence higher return.
Here, Abdul’s returns remain unaltered as 100%.
Let Chetan always buy shares worth Rs. 100.
So he would end up buying 1 + 10 + 10 + 10 + 10 = 41 shares.
When he sells the same at Rs. 200 he gets Rs. 8,200 for the same.
∴ Chetan’s profit = 8200 − 500 = 7700
∴ Chetan's returns = 7700500>100%
∴ We cannot say for sure who would have higher returns.
Hence, option (e).
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