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PRINCESTONE-cr house

by pradeepkaushal9518 » Sun Jul 04, 2010 2:06 am
Ella: The house on Elm Street is a smart investment and we should buy it immediately. The real estate market is volatile, and since current prices are relatively low, we should take advantage of the owner's financial trouble and make a low offer today.

Cindy: We should rent a house while we save enough money for a big down payment. If we don't put enough money down, our mortgage payments will be too high.

Which of the following, if true, would offer the most support for Ella's argument in light of Cindy's criticism?


A big down payment does not protect against rising interest rates.

The risk of making an immediate offer is small if current prices are relatively low.

Some investors in volatile real estate markets have made enormous profits by timing wisely the resale of their investments.

Investing in real estate when prices are low outweighs any advantage gained by having a comparatively low mortgage payment.

If the owner's financial trouble caused the price of the house to drop below market value, the investment would almost certainly bring a profit.
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by jube » Sun Jul 04, 2010 4:35 am
IMO D.

Cindy's counterargument seems to be along the lines of the investment not being profitable (irrespective of the low prices, etc.) if they end up paying huge mortgage payments.

What is the OA? Thanks!
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by 786 » Sun Jul 04, 2010 6:40 am
D and E are close .
I will go with E .

Ella says : we should take advantage of the owner’s financial trouble .
E says : If drop in price is due to financial trouble , then Profit is almost sure .

OA ?
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by outreach » Sun Jul 04, 2010 11:08 am
ella: prefers investment because market prices r low
cindy: is worried abt high mortgage payment if high down payment is not made

D should be correct
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by adi_800 » Wed Jul 07, 2010 2:17 am
Cindy's criticism is if we don't pay enough down payments, then mortgage payments will be too high and due to this there wont be any advantage in buying the house.
D says that the advantages gained by investing when the prices are low outweighs advantage gained by having a comparatively low mortgage payment.

So, D supports the argument..
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by dream700 » Thu Jul 08, 2010 3:21 am
between D and E... E is flawed because it fails to tell anything about "mortgage payments "...it might be that the profit from purchasing the house are huge...but what if the losses that can be incurred through mortgage payments are even greater?

so go with D.

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by deepshi291 » Sun Jul 11, 2010 10:25 pm
I will go with A..
A big down payment does not protect against rising interest rates - directly makes light of Cindy's criticism.

Experts please explain..
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by pradeepkaushal9518 » Sun Jul 11, 2010 11:06 pm
no deepshi A is not correct even it is not oa.

here we are not talking about interest rates
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by deepshi291 » Mon Jul 12, 2010 12:07 am
pradeepkaushal9518 wrote:no deepshi A is not correct even it is not oa.

here we are not talking about interest rates

Thanks..Got it :) Was feeling a little foggy in head earlier, re-read the argument..it's D
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