Maximizing Profits: How Many Shares to Buy for the Best Return in 6 Months?

[rani0712]

Hey guys

I just came across this website i think its awsome..!

Hope i can contribute tooo!

I had a question:

If a Share costs 3 dollars, and it doubles every 3 months
And nother share costs 1 dollar and doubles in One month

How many shares of each would you buy with 1000 dollars, to gain the most profits in 6 months>?

 

[HallsofIvy]

If you invest x dollars in the first, it would be worth (x/3)2^{n/4} dollars in n years. If you invest x dollars in the second it would be worth x(2^{n/12}}.<br /> The ratio of those is <br /> \frac{1}{3}2^{n/4-n/12}= \frac{1}{3}2^{n/6}<br /> For N= 6, that ratio is 2/3< 1. What does that tell you?

 

[DKATyler]

Latex Image generator doesn't appear to be working so:

The first gives an annual ROI of:
(3*2^12/3)/3

The second gives an annual ROI of:
(1*2^12/1)/1

You want the maxmimum amount of shares of the one that gives the largest ROI for 6months.