Critical Reasoning

A leading investment firm has issued new rules that prevent its portfolio managers from short selling stock for their clients. One portfolio managers has concluded that this restriction prevents portfolio managers from providing above-average investment returns for their corporate clients.

Which of the following is an assumption that would allow the portfolio manager's conclusion to be properly drawn ?

A) Investment firm should not restrict the ways in which portfolio managers manage their client's funds.

B) Portfolio managers can provide above-average returns for their clients only by short selling stocks.

C) Short selling is a technique used primarily for corporate clients.

D) Portfolio managers often used short selling techniques to provide above-average returns for corporate clients.

E) Before the investment firm issued the new rules, portfolio managers were not permitted to short sell stocks.

OA D

Can you please explain why not B

jain2016 wrote:A leading investment firm has issued new rules that prevent its portfolio managers from short selling stock for their clients. One portfolio managers has concluded that this restriction prevents portfolio managers from providing above-average investment returns for their corporate clients.

Which of the following is an assumption that would allow the portfolio manager's conclusion to be properly drawn ?

A) Investment firm should not restrict the ways in which portfolio managers manage their client's funds.

B) Portfolio managers can provide above-average returns for their clients only by short selling stocks.

C) Short selling is a technique used primarily for corporate clients.

D) Portfolio managers often used short selling techniques to provide above-average returns for corporate clients.

E) Before the investment firm issued the new rules, portfolio managers were not permitted to short sell stocks.

Premise:
A leading investment firm has issued new rules that prevent its portfolio managers from short-selling stock for their clients.
Conclusion:
This restriction prevents portfolio managers from providing above-average investment returns for their corporate clients.

This CR assumes that there is a LINK between SHORT-SELLING STOCK and PROVIDING ABOVE-AVERAGE RETURNS.

Apply the NEGATION TEST.
When the correct answer choice is negated, the conclusion will be invalidated.

B, negated:
Portfolio managers cannot provide above-average returns for their clients only by short selling stocks.
In other words, portfolio managers CAN provide above-average returns IN OTHER WAYS, invalidating the conclusion that the new restriction prevents portfolio managers from providing above-average investment returns for their corporate clients.
Since B invalidates the conclusion, B is the correct assumption: WHAT MUST BE TRUE for the conclusion to be valid.

The correct answer is B.

D, negated:
Portfolio managers did not often use short selling techniques to provide above-average returns for corporate clients.
In other words, portfolio managers sometimes DID use short-selling techniques, possibly STRENGTHENING the conclusion that -- because of the new rule preventing short-selling -- at least some clients will not see above-average returns.
Since the negation of D offers at least partial support for the conclusion, D is NOT the correct assumption.
Eliminate D.