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Data Context 2
Price Indices

PSL Numerical Test: Data Context 2


Price indices
One of the most common data contexts is asset prices and indices, with questions
focussed on past growth or future growth based on an annual rate.
Question 5: What would the price of a tonne of corn would be in Year 10 if it rose by 6% per annum from its
Year 6 price?

Price of Corn
Year

A: $744.86

$ Price per ton


(31-Dec)

Consumer Price Index


(1-Jan 31-Dec)

1$

400

3.10%

2$

415

3.50%

3$

420

2.20%

4$

450

5.50%

5$

510

4.10%

6$

590

6.20%

B: $567.89

C: $652.65

D: $788.78

E: $444.12

PSL Numerical Test: Data Context 2


Price indices (e.g. CPI, RPI)
Solution to Question 5: What would the price of a tonne of corn would be in Year 10 if it rose by 6% per
annum from its Year 6 price?
Task:

Solution:

Calculate the compounded price growth of corn for the 4 years (from 6 th to 10th year), then multiply Year 6 price
by this number.
From 6th year through 10th year there would be 4 years. Using standard formula (1+6%)^4 = 1.26248
1.26 (compounded price growth rate) x 590 (Year 6 price) = 744.86

Shortcut method: Note that compounded growth by 6% over


4 years i.e. (1+6%)^4-100% = 26% will only be slightly higher
than direct multiplication i.e. 6% x 4 years = 24%. So to
estimate you could take 6%x4+1=124% or 1.24 AND multiply
this by 590 = 731.6. Because the answer should only be
slightly lower the real answer, the closest answer choice
would be 744.86.
Tip 2: This is for estimation questions only: When annual
rate is below 10%, the compounded growth rate over a few
years is only slightly higher than direct multiplication of
growth rate by the number of years. So you can multiply
growth rate by the number of years, then look for a slightly
bigger number as the correct answer.

Price of Corn
Year

$ Price per ton

Consumer Price Index

(31-Dec)

(1-Jan 31-Dec)

1$

400

3.10%

2$

415

3.50%

3$

420

2.20%

4$

450

5.50%

5$

510

4.10%

6$

590

6.20%

Data Context 8
Comparing Several Companies

PSL Numerical Test: Data Context 8


Comparing Market Shares
Typically compares market shares of one or several companies in a specific market in terms of
revenue, sales or costs.
Question 29: Between which two years did WPPs percentage share of the global advertising market sales
increase?

Global Advertising Market Sales ($ billions)


25

billions $

20

22.02
23.92

23.61

22.54

15

10

12.43

13.33

2006

2007

19.22

15.68

16.75

2009

2010

18.53
17.58

WPP
The rest

14.68

A: 2006-2007

B: 2007-2008

2008

C: 2008-2009

2011

D: 2009-2010

E: 2010-2011

PSL Numerical Test: Data Context 8


Comparing Market Shares
Solution to Question 29: Between which two years did WPPs percentage share of the global advertising
market sales increase?

Solution:

First of all, understand the question and look for clues in the graph. For example, percentage share of global sales
means that you need to calculate the ratio of WPP sales to the total sales (including WPP), for each year. Then you
need to identify where this percentage has fallen from the previous year. The problem is that 1 minute would not be
sufficient to calculate the above percentage shares of WPP for each of the 6 years! See Shortcut method below.
Traditional method would be to calculate WPP market share as % of total market for each year (as follows).
2006: 22.54 / (22.54 + 12.43) = 64.46%
2007: 23.61 / (23.61 + 13.33) = 63.91%
2008: 22.02 / (22.02 + 14.68) = 60%
2009: 23.92 / (23.92 + 15.68) = 60.4% - an increase from 2008

Shortcut:
The graph comes with an answer. Notice that the trend
for The Rest of the world is up while WPP trend is
down with an upward spike in 2008-2009 period.
The task is to identify the period where WPP market
share increased from the previous year. WPP actual
sales increased from 2008 to 2009. Hence, 2008 and
2009 would be the best data points to start with - to
save a lot of time! If you dont have time to calculate
you could just choose 2008-2009 period from the
graph.
Indeed, 23.92 / (23.92 + 15.68) = 60.4% which is an
increase from 22.02 / (22.02 + 14.68) = 60%
Tip: Look for clear trend changes and noticeable
spikes in linear graphs for quick answers.

Global Advertising Market Sales ($ billions)


25
20
billions $

Task:

22.02
22.54

23.61

15
10

12.43 13.33

14.68

23.92

19.22

15.68

16.75

2009

2010

18.53
17.58

The rest

5
2006

2007

2008

WPP

2011

Data Context 4
Pie charts with value components

PSL Numerical Test: Data Context 4


Pie charts with several % components (of total sales, costs or investment value)
Pie charts are used for data representation, especially, when the data has various
compositions. Most common pie charts show sales, cost and investment values.
Question 12: If 11% of the value of the China holding is moved to India, what proportion of the total fund
will the India investment represent?
Current Value of Global Government Bond
Fund
Total value = 210 million
US
25%

Brazil
5%

China
10%

India
9%
Russia
12%

UK
39%

A: 11.7%

B: 12.5%

C: 10.1%

D: 9.9%

E: 9.5%

PSL Numerical Test: Data Context 4


Pie charts with several % components (of total sales, costs or investment value)
Solution to Question 12: If 11% of the value of the China holding is moved to India, what proportion of the
total fund will the India investment represent?
Task:
Solution:

The key task is to calculate the value that will move from China holding to India holding. Then add it to the actual
value of existing India holding, then divide the sum by the total value of the Fund.
Total value of China holding: 210m x 10% = 21m
11% of China holding: 21m x 11% = 2.31m
Total existing value of India holding: 210m x 9% = 18.9m
Total new value of India holding: 18.9m + 2.31m = 21.21m.
Percentage representation: 21.21m / 210m = 10.1%

Shortcut: There is no need to use the actual value of the Fund in


the calculations. Simply, take 10% China holding, multiply by 11%,
then add the result to the existing 9% India holding:
10% x 11% + 9% = 10.1%

Current Value of Global Government


Bond Fund
US
25%

UK
39%

Total value = 210 million


Brazil
China
5%
10%

India
9%
Russia
12%

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