CR Practice test question #13

Expert replies

missionmba: Master | Next Rank: 500 Posts; Posts: 288; Joined: Thu Jul 31, 2008 10:54 pm; Location: Bombay, India

by missionmba » Tue Aug 05, 2008 4:25 am

The cost of certain types of investments, such as stocks and real estate, is affected by the public’s tendency to want to be part of the pack; if a particular stock is bought by high-profile investors, the public may rush to follow suit, thereby -----.

Which of the following best completes the passage above?

limiting the number of shares available for purchase by institutional investors

driving up the price of the stock

reducing the possibility that the stock will earn high profits

putting pressure on the company to pay higher dividends

endangering the stock offerings of new companies

B

Mission Mba

Everyone has a will to win but very few have the will to prepare to win

Source: Beat The GMAT — Critical Reasoning | Tue Aug 05, 2008 4:25 am

raunekk: Legendary Member; Posts: 1159; Joined: Wed Apr 16, 2008 10:35 pm; Thanked: 56 times

by raunekk » Tue Aug 05, 2008 6:43 am

imo B

codesnooker: Legendary Member; Posts: 543; Joined: Fri Jan 18, 2008 1:01 am; Thanked: 43 times; GMAT Score:580

by codesnooker » Tue Aug 05, 2008 6:51 am

Simple Logic!!!

A) limiting the number of shares available for purchase by institutional investors
WRONG No one is talking about Institutional investors. (Out of Scope = OS)

B) driving up the price of the stock
CORRECT How?

1. Author talked about cost.
2. It also tells when people see high profile buyers buying a certain stock then tend to buy it and once people started buying certain stock its price naturally shoots up.

C) reducing the possibility that the stock will earn high profits
WRONG (OS, didn't talk about profits anywhere)

D) putting pressure on the company to pay higher dividends
WRONG (OS)

E) endangering the stock offerings of new companies
WRONG (OS)

yingli: Newbie | Next Rank: 10 Posts; Posts: 6; Joined: Wed Aug 06, 2008 6:20 am

by yingli » Wed Aug 06, 2008 2:18 pm

IMO B

peter.p.81: Master | Next Rank: 500 Posts; Posts: 300; Joined: Mon Apr 07, 2014 7:58 am

by peter.p.81 » Wed May 11, 2016 1:56 am

Guys can anyone give a decent reason why B is not right

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