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While depressed property values can hurt some large investor

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While depressed property values can hurt some large investor

by RBBmba@2014 » Mon May 18, 2015 5:12 am
While depressed property values can hurt some large investors, they are potentially devastating for homeowners, whose equity - in many cases representing a life's savings-can plunge or even disappear.

(A) they are potentially devastating for homeowners, whose
(B) they can potentially devastate homeowners in that their
(C) for homeowners they are potentially devastating, because their
(D) for homeowners, it is potentially devastating in that their
(E) it can potentially devastate homeowners, whose

OA : A

@ Experts - It's an OG question. Although it appeared pretty easy initially, I got this question wrong. Could you please share your detail explanation ? Much thanks in advance.
Last edited by RBBmba@2014 on Mon May 18, 2015 11:18 pm, edited 1 time in total.
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by GMATGuruNY » Mon May 18, 2015 5:53 am
RBBmba@2014 wrote:While depressed property values can hurt some large investors, they are potentially devastating for homeowners, whose equity - in many cases representing a life's savings-can plunge or even disappear.

(A) they are potentially devastating for homeowners, whose
(B) they can potentially devastate homeowners in that their
(C) for homeowners they are potentially devastating, because their
(D) for homeowners, it is potentially devastating in that their
(E) it can potentially devastate homeowners, whose
In B and E, can and potentially are redundant.
Eliminate B and E.

Forms of the same pronoun (they, them, their) must refer to the same antecedent.
C: for homeowners they are potentially devastating, because their equity can plunge.
Here, both they and, their seem to refer to depressed property values.
As a result, the clause in red implies that the equity of DEPRESSED PROPERTY VALUES can plunge.
The intended meaning is that HOMEOWNERS' equity can plunge.
Eliminate C.

In D, it lacks a clear antecedent.
Eliminate D.

The correct answer is A.

Some test-takers might incorrectly eliminate the OA because of a seemingly ambiguous pronoun (they).
OA: While depressed property values can hurt some large investors, they are potentially devastating for homeowners.
On the GMAT, the default referent for a subject pronoun (he, she, they, it) is the preceding subject.
Here, the default referent for they (subject pronoun) is depressed property values (the preceding subject).
And context matters.
Given the meaning conveyed by the introductory modifier, no reasonable reader would think that some large investors are potentially devastating for homeowners.
The only logical interpretation is that DEPRESSED PROPERTY VALUES are potentially devastating.
Hence, the pronoun in the OA is NOT ambiguous.

A good rule of thumb:
If you spot an answer choice with a seemingly ambiguous pronoun, do not immediately eliminate the answer choice.
Instead, look for an alternate answer choice that avoids the ambiguity and is free of errors.
If no such answer choice can be found, look for other reasons to keep or eliminate the answer choice with the seemingly ambiguous pronoun.
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by RBBmba@2014 » Mon May 18, 2015 7:29 am
Hi GMATGuru - I was confused between [spoiler]A & C[/spoiler]. I didn't have any issues with the pronoun they, it clearly refers to "depressed property values".

The issue I had - I took "equity" in financial term and in A "equity" modifies 'homeowners'. So it appeared illogical to me. Whereas, I thought in C 'equity' correctly modifies DEPRESSED PROPERTY VALUES. As a result of this I eliminated the OA:A.

Can you please shed light why "equity" can't modify DEPRESSED PROPERTY VALUES here ?
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by DavidG@VeritasPrep » Mon May 18, 2015 10:46 am
The issue I had - I took "equity" in financial term and in A "equity" modifies 'homeowners'.
'Equity' doesn't modify 'homeowners' in A. Rather, the equity belongs to the homeowners.

Take a simple example: Dave, whose car is in the shop, is stranded. Clearly 'car' doesn't modify 'Dave.' Rather, the possessive modifier "whose" indicates that it's Dave's car we're talking about. Similarly, in A, it's the homeowner's equity we're talking about. (When you pay off your mortgage, you're the one who is acquiring equity in the house.)
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