Consumers in California seeking personal loans have fewer

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by bigfernhead » Tue Jul 08, 2008 9:25 am
Yes, people need to do this.

I'd prefer to have the spoiler on, than have people post answers to questions at a later time.

There's a lot of time that people don't come back to the forum on a timely manner, and we're always left guessing what OA was.
lunarpower wrote:here's how to do the "spoiler" thing i just talked about:

type
[spoiler]
before the text you want to hide, and
[/spoiler]
after that text.
the text will then be displayed in black on a black background, rendering it unreadable unless it's highlighted.

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by gracezz » Thu Apr 29, 2010 8:11 pm
i chose B because I thought that since Personal loans are risker, then it also offered as an alternative reason for banks to charge high rates of interests...
Is b wrong because it dragged in other types of loans which are not part of the problem under discussion?

what if B goes like : Personal loans are risker...

Pls help me out, im confused here...

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by pradeepkaushal9518 » Thu Apr 29, 2010 10:42 pm
conclusion of the passage is high interest rate is due to lake of competitions.

but by the statement that since they have to pay high wages to qualified workers their interest rates are higher. if this true it will weaken the argument above.so A is the answer

if the no of defaluters are low then the banks recovery cost will be less and then they have to lower the interest rates. but this will change fact in the argument which cant be done so D is not correct

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by aravindb » Mon Jun 28, 2010 10:36 am
lunarpower wrote:
svaradhan wrote:I have a doubt with answer choice A. It states - "Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer". But the argument is based on high interest rates for personal loans right? Where did depositors come into picture? Is this not out of scope? Please clarify
this is a 'weaken the conclusion' part. to weaken the conclusion of a passage, you have to do the following 2 things:
* identify an assumption that holds in the passage - THIS must remain within the scope of the argument
* find a piece of OUTSIDE information that strikes down that assumption - THIS generally must come from OUTSIDE the scope of the original argument

in this problem, the questionable ASSUMPTION is the logical inference that the shortage of competition must be responsible for the higher interest rates; that is indeed within the scope of the passage.
HOWEVER,
to weaken the conclusion, you HAVE to bring in outside information: viz., an alternative explanation for the higher interest rates. obviously, an alternative explanation is going to have to come from outside the scope of the original passage
in fact, the only way a correct 'weaken the conclusion' answer can stay completely within the scope of the original passage is to directly contradict one of the passage's premises; this pretty much doesn't happen (too simplistic, and not in keeping with the generally sacrosanct nature of the factual statements put forth as premises), so you should essentially always be looking outside the passage for statements that weaken the conclusion.
I agree with svardhan.Hi Ron, i eliminated A , similarly C and E just because, it talks about depositors..
Who are depositors? those who hold savings or some sort of savings accounts in the banks..
Are the people who take personal loans called depositors? No in my way of understanding..
So i thought A,C,E talk about depositing rather than talk about personal loan..

Ron, am I misunderstanding words because am a non-native speaker/mindset?? pls help me out...
i chose B, but later after seeing OA, i corrected B by justifying that B is comparing X and Y and if B were true then interest rates in other states must also be the same..

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by jaiswalamrita » Mon Aug 06, 2012 1:28 pm
Sorry to open an old thread, but I am not able to strike option E out.

(E) Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the United States because in California there is less competition to attract depositors.

Even this option brings in new reason of high interest rate on personal loan.
This is how I interpreted it:

There are fewer banks in Cal
Fewer banks so less competition
Less competition so these banks offer less interest rate on deposits
Less interest rate so they get less deposits (because depositors are less attracted)
Less deposits so bank has less fund to disburse as loan
Less fund to disburse hence bank increased the interest rate on loan

As per me this is what happens in practical also.

Please let me know whats wrong with this reasoning.

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by Ankur87 » Tue Aug 28, 2012 12:00 am
jaiswalamrita wrote:Sorry to open an old thread, but I am not able to strike option E out.

(E) Interest rates paid by California banks to depositors are lower than those paid by banks in other parts of the United States because in California there is less competition to attract depositors.

Even this option brings in new reason of high interest rate on personal loan.
This is how I interpreted it:

There are fewer banks in Cal
Fewer banks so less competition
Less competition so these banks offer less interest rate on deposits
Less interest rate so they get less deposits (because depositors are less attracted)
Less deposits so bank has less fund to disburse as loan
Less fund to disburse hence bank increased the interest rate on loan

As per me this is what happens in practical also.

Please let me know whats wrong with this reasoning.


Hi,
here u dont have to apply your practical knowledge.
the statement is saying about the depositors getting less interest rates on their deposits because of less competition among banks.
This is the same reason which is used in the paragraph for higher interest rates on loans so it strengthens the conclusion.

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by tanviet » Tue Oct 02, 2012 1:23 am
lunarpower wrote:
svaradhan wrote:I have a doubt with answer choice A. It states - "Because of the comparatively high wages they must pay to attract qualified workers, California banks charge depositors more than banks elsewhere do for many of the services they offer". But the argument is based on high interest rates for personal loans right? Where did depositors come into picture? Is this not out of scope? Please clarify
this is a 'weaken the conclusion' part. to weaken the conclusion of a passage, you have to do the following 2 things:
* identify an assumption that holds in the passage - THIS must remain within the scope of the argument
* find a piece of OUTSIDE information that strikes down that assumption - THIS generally must come from OUTSIDE the scope of the original argument

in this problem, the questionable ASSUMPTION is the logical inference that the shortage of competition must be responsible for the higher interest rates; that is indeed within the scope of the passage.
HOWEVER,
to weaken the conclusion, you HAVE to bring in outside information: viz., an alternative explanation for the higher interest rates. obviously, an alternative explanation is going to have to come from outside the scope of the original passage!

in fact, the only way a correct 'weaken the conclusion' answer can stay completely within the scope of the original passage is to directly contradict one of the passage's premises; this pretty much doesn't happen (too simplistic, and not in keeping with the generally sacrosanct nature of the factual statements put forth as premises), so you should essentially always be looking outside the passage for statements that weaken the conclusion.
thank you Ron for this posting.
we have to do 2 things: identifying an assumption and an outside information which invalidate this assumption.

we have to do there 2 things before going to the answer choices then we go to answer choices and look for a match between what we prethink and what is in the correct answer.
Is that right?

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by himu » Mon Apr 22, 2013 1:49 am
HI jaiswalamrita,


Conclusion :
This shortage of competition among banks explains why interest rates on personal loans in California are higher than in any other region of the United States.

We need to weaken it "shortage of competition among banks"....might be THERE IS NO COMPETITION OR SOME OTHER RESAON for the interest rates to be high .

So E says "there is less competition to attract depositors." it doesn't weaken.

hope it helps !