CAT Quant Practice Problems

Question: Shabnam is considering three alternatives to invest her surplus cash for a week. She wishes to guarantee maximum returns on her investment. She has three options, each of which can be utilized fully or partially in conjunction with others.

Option A : Invest in a public sector bank. It promises a return of +0.10%.

Option B : Invest in mutual funds of ABC Ltd. A rise in the stock market will result in a return of + 5% while a fall will entail a return of –3%.

Option C: Invest in mutual funds of CBA Ltd. A rise in the stock market will result in a return of –2.5%, while a fall will entail a return of +2%.

What strategy will maximize the guaranteed return to Shabnam?

100% in option A
36% in option B and 64% in option C
64% in option B and 36% in option C
1/3 in each of the three options
30% in option A, 32% in option B and 38% in option C
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CAT Quant Practice Problems
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