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One more CR

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One more CR

by gmatmachoman » Mon Sep 28, 2009 10:21 am
Home insurance premiums are typically set after an appraiser assigns an official assessed value. Reassessments should be frequent in order to remove distortions that arise when property value changes at differential rates. In actual fact, however, properties are reassessed only when they stand to benefit the insurance company. In other words, a reassessment takes place when the most likely outcome is in increase in insurance premiums to the homeowner.

Which of the following, if true, describes a situation in which a reassessment should occur but in unlikely to do so?

A. Property values have risen sharply and uniformly.

B. Property values have risen everywhere - some very sharply, some moderately.

C. Property values have on the whole risen sharply; yet some have dropped slightly.

D. Property values have on the whole dropped significantly; yet some have risen slightly.

E. Property values have dropped significantly and uniformly.

OA:---
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by pandeyvineet24 » Mon Sep 28, 2009 10:59 am
E
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by hitmewithgmat » Tue Sep 29, 2009 8:41 am
Given premises:
-Purpose of reassessment: to remove distortions when property value changes at different rates
-When reassessment is needed: Only when the insurance company makes profits
-In other words, homeowner will pay more $$$
Question:Which of the following, if true, describes a situation in which a reassessment should occur but in unlikely to do so? (translation: 2 things will occur. 1. Reassessment is needed. 2.Insurance company won't make profits)

A. Property values have risen sharply and uniformly.
(1.Yes. 2. No. insurance company won't make money)
B. Property values have risen everywhere - some very sharply, some moderately.
(1.Yes. 2. No.)
C. Property values have on the whole risen sharply; yet some have dropped slightly.
(1. Yes. 2.No)
D. Property values have on the whole dropped significantly; yet some have risen slightly.
(1. Yes. 2.Yes.)
E. Property values have dropped significantly and uniformly.
(1.Yes. 2.No. since there is an overall plummeting the prices, the insurance company prefer not to reassess)
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by vaibhav.iit2002 » Mon Oct 05, 2009 9:23 am
I am with E.
Whats OA?
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by mehravikas » Mon Oct 05, 2009 12:32 pm
I would go with 'D' as some of the property prices have increased but there has been a major decline overall.
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by gmatv09 » Tue Oct 06, 2009 2:32 pm
IMO D

Reassessment is done to remove distortions, arising from diff rate changes.
Hence A & E can be ruled out !
In B & C, the ins cos will do reassessment bcoz premiums will increase..
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Re: One more CR

by heshamelaziry » Tue Oct 06, 2009 7:08 pm
gmatmachoman wrote:Home insurance premiums are typically set after an appraiser assigns an official assessed value. Reassessments should be frequent in order to remove distortions that arise when property value changes at differential rates. In actual fact, however, properties are reassessed only when they stand to benefit the insurance company. In other words, a reassessment takes place when the most likely outcome is in increase in insurance premiums to the homeowner.

Which of the following, if true, describes a situation in which a reassessment should occur but in unlikely to do so?

A. Property values have risen sharply and uniformly.

B. Property values have risen everywhere - some very sharply, some moderately.

C. Property values have on the whole risen sharply; yet some have dropped slightly.

D. Property values have on the whole dropped significantly; yet some have risen slightly.

E. Property values have dropped significantly and uniformly.

OA:---
Your OA posted above has no answer choice. Please post OA
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Re: One more CR

by kaulnikhil » Wed Oct 07, 2009 12:27 am
gmatmachoman wrote:Home insurance premiums are typically set after an appraiser assigns an official assessed value. Reassessments should be frequent in order to remove distortions that arise when property value changes at differential rates. In actual fact, however, properties are reassessed only when they stand to benefit the insurance company. In other words, a reassessment takes place when the most likely outcome is in increase in insurance premiums to the homeowner.

Which of the following, if true, describes a situation in which a reassessment should occur but in unlikely to do so?

A. Property values have risen sharply and uniformly.
---differential rates so A is out

B. Property values have risen everywhere - some very sharply, some moderately.---- this would help the
insurance company as increase in premiums would help them to make more money..
C. Property values have on the whole risen sharply; yet some have dropped slightly.---- same as B

D. Property values have on the whole dropped significantly; yet some have risen slightly.----CORRECT--prices dropped do companies wont insure

E. Property values have dropped significantly and uniformly.---differential rates so E is out

OA:---
should be D..
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by gmatmachoman » Sat Oct 10, 2009 9:47 pm
OA D
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by Haroon Tarar » Tue Jan 22, 2013 1:26 am
@gmat macoman ,very well explained ,thanks
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