Some Assumption Questions.

Mani_mba · Posted: Sun Jul 20, 2008 10:06 pm Post subject: Some Assumption Questions.

1. Technically a given category of insurance policy is under priced if, over time, claims against it plus expenses associated with it exceed total income from premiums. But premium income can be invested and will then yield returns of its own. Therefore, an under priced policy does not represent a net loss in every case.
The argument above is based on which of the following assumptions?
(A) No insurance policies are deliberately under priced in order to attract customers to the insurance company offering such policies.
(B) A policy that represents a net loss to the insurance company is not an under priced policy in every case.
(C) There are policies for which the level of claims per year can be predicted with great accuracy before premiums are set.
(D) The income earned by investing premium income is the most important determinant of an insurance company’s profits.
(E) The claims against at least some under priced policies do not require paying out all of the premium income from those policies as soon as it is earned.

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2) In several cities, the government is going ahead with ambitious construction projects despite the high office vacancy rates in those cities. The vacant offices, though available for leasing, unfortunately do not meet the requirements for the facilities needed, such as court houses and laboratories. The government, therefore, is not guilty of any fiscal wastefulness.
Which of the following is an assumption on which the argument above depends?
(A) Adaptation of vacant office space to meet the government’s requirements, if possible, would not make leasing such office space a more cost-effective alternative to new construction.
(B) The government prefers leasing facilities to owning them in cases where the two alternatives are equally cost-effective.
(C) If facilities available for leasing come very close to meeting the government’s requirements for facilities the government needs, the government can relax its own requirements slightly and consider those facilities in compliance.
(D) The government’s construction projects would not on being completed, add to the stock of facilities available for leasing in the cities concerned.
(E) Before embarking on any major construction project, the government is required by law to establish beyond any reasonable doubt that there are no alternatives that are most cost-effective.
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3) Top college graduates are having more difficulty demonstrating their superiority to prospective employers than did the top students of twenty years ago when an honors degree was distinction enough. Today’s employers are less impressed with the honors degree. Twenty years ago no more than 10 percent of a given class graduated with honors. Today, however, because of grade inflation, the honors degree goes to more than 50 percent of a graduating class. Therefore, to restore confidence in the degrees they award, colleges must take steps to control grade inflation.
Which one of the following is an assumption that, if true, would support the conclusion in the passage?
(A) Today’s students are not higher achievers than the students of twenty years ago.
(B) Awarding too many honors degrees causes colleges to inflate grades.
(C) Today’s employers rely on honors ranking in making their hiring decisions.
(D) It is not easy for students with low grades to obtain jobs.
(E) Colleges must make employers aware of the criteria used to determine who receives an honors degree

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I have no OAs for these questions. So i request experts also to jump in and provide possible solutions with explanations.

reachac · Posted: Sun Jul 20, 2008 10:16 pm Post subject:

E
A
A

loki.gmat · Posted: Sun Jul 20, 2008 11:30 pm Post subject:

1) IMO E - if all the under priced policies require the premium to be paid out as soon as it earned then the companies wont be able to invest n yield returns.

2) IMO A - if the government is a bit more innovative in its construction projects then the requirements of court houses and laboratories can be met.hence the government will be guilty of fiscal wastefulness.

3) IMO C - if today's employers donot rely on honors ranking in making their hiring decisions then the steps taken by the colleges to control grade inflation will not restore confidence in the degrees.

Thanks!

john1234 · Posted: Sun Jul 20, 2008 11:42 pm Post subject:

1) E
2)A
3)B.

1) The author concludes that an underprice policy does not represent a net loss in every case.Why? Because he assumes that the claims against at least some under priced policies do not require paying out all of the premium income from those policies as soon as it is earned .
And to be sure you get the right answer,you can NEGATE the answer choice to see whether it weakens the conclusion.

2) .Adaptation of vacant office space to meet the government’s requirements, if possible, would not make leasing such office space a more cost-effective alternative to new construction.

3) The conclusion is "colleges must take steps to control grade inflation" the only answer choice that reflects on the conclusion is B.
I paraphased the argument as "Many honor degrees are caused by grade inflation".

raunekk · Posted: Mon Jul 21, 2008 12:33 am Post subject:

IMO:

E

A

A

aj5105 · Posted: Mon Jul 21, 2008 6:51 am Post subject:

E

A

B

Mahalo · Posted: Mon Jul 21, 2008 7:44 pm Post subject:

1. IMO (E)

Conclusion:
Therefore, an under priced policy does not represent a net loss in every case.

what if claims against at least some of the under priced policies are not paid instantly after its premium income is earned. Then, the premium income can be invested and it will earn some profits for the policy.

2. IMO (E)

Conclusion:
The government, therefore, is not guilty of any fiscal wastefulness.

If the government establishes that there are no cost-effective alternative before embarking on any project, it can be said that the government is not guilty of any fiscal wastefulness

3. IMO (A)

Conclusion:
Therefore, to restore confidence in the degrees they award, colleges must take steps to control grade inflation.

what if today’s students are not higher achievers than the students of twenty years ago. # of honours grades can be kept at par with the # 20 years ago.