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Expert replies
by hitmewithgmat » Thu Oct 15, 2009 9:04 am
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation's officers and directors have bought up to nine times as much of it as they have sold.
The facts above best support which of the following predictions?
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
(B) Inside purchases of MEGA stock are about to cease abruptly.
(C) The price of MEGA stock will soon begin to go up.
(D) The price of MEGA stock will continue to drop, but less rapidly.
(E) The majority of MEGA stock will soon be owned by MEGA's own officers and directors.
Last edited by hitmewithgmat on Thu Oct 15, 2009 1:31 pm, edited 3 times in total.
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Source: — Critical Reasoning |

by mp2437 » Thu Oct 15, 2009 11:23 am
C. When sales/purchases fall below 2, stock goes up.

Denominator is going up, so ratio is going down, which supports conclusion, so stock should rise.
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by pandeyvineet24 » Thu Oct 15, 2009 11:33 am
C for me.
as argument states, when Ratio between sales and purchase falls, Price Increases. When purchase increases to 9 times the number of shares sold, the price should increase.
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by mehravikas » Thu Oct 15, 2009 11:55 am
should be 'C'
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by hitmewithgmat » Thu Oct 15, 2009 1:30 pm
OA is C. Thanks guys.
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by kris77 » Sun May 15, 2016 4:31 pm
My intuition whispers that it is C
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