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Expert replies
by joyseychow » Tue Oct 27, 2009 5:22 am
Which of the following best completes the passage below?
The more worried investors are about losing their money, the more they will demand a high potential return on their investment; great risks must be offset by the chance of great rewards. This principle is the fundamental one in determining interest rates, and it is illustrated by the fact that______
(A) successful investors are distinguished by an ability to make very risky investments without worrying about their money
(B) lenders receive higher interest rates on unsecured loans than on loans backed by collateral
(C) in times of high inflation, the interest paid to depositors by banks can actually be below the rate of inflation
(D) at any one time, a commercial bank will have a single rate of interest that it will expect all of its individual borrowers to pay
(E) the potential return on investment in a new company is typically lower than the potential return on investment in a well-established company
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Source: — Critical Reasoning |

by 2010gmat » Tue Oct 27, 2009 5:48 am
B .. unsecured loan --> high risk --> investors would want high return --> high interest rates
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by delhiboy1979 » Tue Oct 27, 2009 6:01 am
I am not able to choose between B and E.
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by 2010gmat » Tue Oct 27, 2009 6:36 am
E actually contradicts the argument...

new companies --> riskier ,

well estd companies --> less risky
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by mehravikas » Tue Oct 27, 2009 11:43 am
should be - B
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by gmatv09 » Tue Oct 27, 2009 4:22 pm
another vote for B
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by amysky_0205 » Thu Dec 06, 2012 6:31 am
I still don't know how to choose B..

can someone explain~? thank u!
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