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Investment broker (Source: Princeton Review practice)

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Investment broker (Source: Princeton Review practice)

by freshy » Wed Jul 29, 2009 5:35 pm
Which of the following best completes the passage below?

Individuals who hire a full-service investment broker are paying for more than the service of buying and selling stocks. They want to receive individualized attention to their financial interests. Computerized trading and automated telephone systems will not benefit a full-service brokerage because ___________.


A) low- to middle-income investors represent an increasing percentage of the volume of shares traded.

B) gaining repeat business relies on maintaining a feeling of personal contact between customer and broker.

C) investors are as concerned with the level of net return on their investments as with the price they pay for brokerage services.

D) increased efficiency and decreased customer service response time will increase profit margins without endangering current revenue.

E) salaries paid in a full-service brokerage are not necessarily higher than salaries at a discount brokerage.

OA: B

Please elaborate your thoughts.
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by 4seasoncentre » Wed Jul 29, 2009 5:51 pm
Hmmm...

I agree with B, but would have picked C.

A) favours the use of computerized trading

D) suggest that computerized trading is more profitable

E) misses the ball because fewer people will have to be hired in an automated environment.

B makes sense, but I actually think it is weak because it only accounts for repeat business. If you get enough first-time customers, that could potentially offset the fewer repeat customers

C makes more sense to me, because a human broker can be referred to determine whether a stock is a good investment, and this would apply to both price-conscious and non-price conscious consumers.
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Re: Investment broker (Source: Princeton Review practice)

by amazonviper » Thu Jul 30, 2009 9:46 am
freshy wrote:Which of the following best completes the passage below?

Individuals who hire a full-service investment broker are paying for more than the service of buying and selling stocks. They want to receive individualized attention to their financial interests. Computerized trading and automated telephone systems will not benefit a full-service brokerage because ___________.




OA: B

Please elaborate your thoughts.
Yay!!. I chose B!. My reasoning is as follows ,

A) low- to middle-income investors represent an increasing percentage of the volume of shares traded. -> Out of scope

B) gaining repeat business relies on maintaining a feeling of personal contact between customer and broker. -> Correct (explanation below)

C) investors are as concerned with the level of net return on their investments as with the price they pay for brokerage services. --> Out of scope since we are not concerned about returns (profit/loss).

D) increased efficiency and decreased customer service response time will increase profit margins without endangering current revenue. --> Out of scope again. We are not concerned about profits/losses .

E) salaries paid in a full-service brokerage are not necessarily higher than salaries at a discount brokerage. --> Out of scope.

The passage clearly states that the individualized attention is the main reason for going Full-Service brokerage. Computerizing all the process will take away the personal relation between the customer and the broker.

Be aware that in this passage the use of computers is assumed to decrease individual attention and hence has a negative effect. Only choice B addresses this assumption clearly and hence the answer.
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by Spring2009 » Thu Jul 30, 2009 7:37 pm
Totally agree with B.
Customers need indivisualized attention from broker. If not, the Computerized trading and automated telephone are good enough.
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by freshy » Sat Aug 01, 2009 7:37 am
Thanks I get what you guys mean now :D
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by lunarpower » Tue Aug 04, 2009 1:19 am
4seasoncentre said (my emphasis):
4seasoncentre wrote:C makes more sense to me, because a human broker can be referred to determine whether a stock is a good investment
you can't assume this. there is NOTHING in the passage from which you can make this deduction, so it's completely unjustified.

remember, you CANNOT MAKE EXTRA ASSUMPTIONS, and you CANNOT BRING IN OUTSIDE KNOWLEDGE.

so, as far as you are concerned in CR, (c) is totally and completely irrelevant to the passage.
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Re: Investment broker (Source: Princeton Review practice)

by lunarpower » Tue Aug 04, 2009 1:26 am
this stuff becomes less difficult if you just remember that you have to stay totally literal and never EVER make any assumptions that are not justified by the actual content of the passage.

if you keep these standards in mind, then the elimination in this problem is pretty straightforward.

ALL YOU CAN USE IS:
* Individuals who hire a full-service investment broker are paying for more than the service of buying and selling stocks
--> i.e., we need to focus on what "more than the service of..." refers to

* They want to receive individualized attention to their financial interests.
--> this is the ONLY THING that we can justify, beyond the service of buying and selling stocks. ANYTHING ELSE IS IRRELEVANT AND/OR UNJUSTIFIED.

* Computerized trading and automated telephone systems will not benefit a full-service brokerage because ___________.
--> this can ONLY be filled with something that has to do with the above considerations.

A) low- to middle-income investors represent an increasing percentage of the volume of shares traded.
wrong, since this has nothing to do with "individualized attention to their financial interests".
B) gaining repeat business relies on maintaining a feeling of personal contact between customer and broker.
this has to do with "individualized attention to their financial interests", so this is CORRECT.
C) investors are as concerned with the level of net return on their investments as with the price they pay for brokerage services.
wrong, since this has nothing to do with "individualized attention to their financial interests".
D) increased efficiency and decreased customer service response time will increase profit margins without endangering current revenue.

wrong, since this has nothing to do with "individualized attention to their financial interests".
E) salaries paid in a full-service brokerage are not necessarily higher than salaries at a discount brokerage.

wrong, since this has nothing to do with "individualized attention to their financial interests".

NONE of the other four choices has ANYTHING to do with the required connection, unless you make up connections that are completely unjustified by the information that's actually contained in the passage (as did poster "4seasoncentre" in one post above). this is easy to do, so you must struggle to avoid it.

once you stop trying to do this, and learn to stick to the actual content of the passage, you'll find that problems like this one will get much easier.
Last edited by lunarpower on Tue Aug 04, 2009 12:04 pm, edited 2 times in total.
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by 4seasoncentre » Tue Aug 04, 2009 8:35 am
^
that's really uncalled for

in the future I will ask that you not refer to any of my posts
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by lunarpower » Tue Aug 04, 2009 12:00 pm
4seasoncentre wrote:^
that's really uncalled for

in the future I will ask that you not refer to any of my posts
i'm not being rude; i'm sorry if it came across that way.

since this is an anonymous internet forum, i find that students learn the most if i post points in as direct and constructive a fashion as possible.

if posters commit errors that betray a lack of understanding of the fundamental rules of a problem type - as happened in this problem - then i tend to point out those errors more emphatically than others, because the same errors will cost you problem after problem on the real exam.

i would certainly not address you in person with the same bluntness with which i post on this forum.

you have learned more about this question type from my post, no?

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by freshy » Fri Aug 07, 2009 8:14 am
thank you Ron,

I do understand a lot more...I find it quite difficult to think with GMAT logic sometimes and when you point out that the scope is "individualized" which appear in the correct answer as "personal contact"....I can see it now.

I'm sure everyone in this forum comes in with good intention so don't take anything personally ok ^-^ Appreciate all the helps from everyone!
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by kate.loo » Mon May 16, 2016 12:23 am
I still feel C should be the answer
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