Factorial Mutual Fund

Expert replies

jain2016: Master | Next Rank: 500 Posts; Posts: 313; Joined: Tue Oct 13, 2015 7:01 am; Thanked: 2 times

by jain2016 » Tue Apr 05, 2016 9:08 am

Advertisement: Last year, Factorial Mutual Fund continued its strong record of investment performance. Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets, nearly double the market return. Therefore, investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios.

The claim in the advertisement above is based on which of the following assumptions?

A) Factorial Fund is one of the oldest and largest mutual funds in the investment industry.

B) A substantial part of the 15% portfolio appreciation was attributable to the returns of Factorial Fund and this level of fund's performance is likely to persist in the future.

C) Last year, Factorial Fund outperformed all other funds with similar style and investment objectives.

D) The Fund is suitable to all investors.

E) The fees charged by Factorial Fund are among the lowest in the investment industry.

OAB

Hi Experts ,

Please explain what is wrong with option D

Thanks,

SJ

Source: Beat The GMAT — Critical Reasoning | Tue Apr 05, 2016 9:08 am

DavidG@VeritasPrep: Legendary Member; Posts: 2663; Joined: Wed Jan 14, 2015 8:25 amFollowed by: 128 members; Location: Boston, MA; Thanked: 1153 times; GMAT Score:770

by DavidG@VeritasPrep » Tue Apr 05, 2016 9:23 am

jain2016 wrote:Advertisement: Last year, Factorial Mutual Fund continued its strong record of investment performance. Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets, nearly double the market return. Therefore, investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios.

The claim in the advertisement above is based on which of the following assumptions?

A) Factorial Fund is one of the oldest and largest mutual funds in the investment industry.

B) A substantial part of the 15% portfolio appreciation was attributable to the returns of Factorial Fund and this level of fund's performance is likely to persist in the future.

C) Last year, Factorial Fund outperformed all other funds with similar style and investment objectives.

D) The Fund is suitable to all investors.

E) The fees charged by Factorial Fund are among the lowest in the investment industry.

OAB

Hi Experts ,

Please explain what is wrong with option D

Thanks,

SJ

Ask yourself: can we really assume that the fund is suitable for all investors? If it were suitable for, say, 98% of investors, wouldn't the argument still hold?

Put another way, if we were to negate the answer choice: The fund is not suitable for all investors, it wouldn't destroy the argument, as a fund that had superior returns, but wasn't appropriate for every single investor on earth, is one that is still worth considering. Because the negation of the correct answer should destroy the argument, D cannot be correct.

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jain2016: Master | Next Rank: 500 Posts; Posts: 313; Joined: Tue Oct 13, 2015 7:01 am; Thanked: 2 times

by jain2016 » Tue Apr 05, 2016 9:31 pm

Hi David ,

Thanks for your reply sir. I got it now.

Thanks,

SJ

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