I think "they" is not an issue here, only choice A fits. All others have different kind of errors. They does not follow a rule like which (anything preceding "which" is referred to by which) hence in this context does not seem ambiguous to me.[/quote]

Thanks. I know A fits best.

My query is "In such kind of sentences, how do we decide if the usage of "They" is creating ambiguity or not? "

If you see, "They" can refer to both "Bear Markets" as well as "Investors". How to decide that "They" is referring to "Bear Markets"?

While bear markets certainly hurt institutional investors, they are potentially devastating for individual investors, whose nest eggs - in many cases representing the sole source of retirement funds - can plummet or even vanish entirely.

a. they are potentially devastating for individual investors, whose
b. they can potentially devastate individual investors in that their
c. for individual investors they are potentially devastating, because their
d. for individual investors, it is potentially devastating in that their
e. it can potentially devastate individual investors, whose

See, the funda here is:

They is in the subjective case...So, it will refer to the subject of the previous clause....i.e
Bear markets not the individual investors.....Whose refers to the individual investors....So A is correct....

B is wrong because of "in that their construction"

C has ambiguity reference of they

D is wrong because of it reference...

E is wrong because of it reference.....

Any doubts???

A

To answer your question, I thought about that too, and to me "while" made me think that there should be a connection between the two thoughts. Institutional Investors could not be the subject of 'they' because 'while' sets up a comparison between the investors getting hurt and something else...

A is the one!

gmatjeet wrote:Thanks. I know A fits best.

My query is "In such kind of sentences, how do we decide if the usage of "They" is creating ambiguity or not? "

If you see, "They" can refer to both "Bear Markets" as well as "Investors". How to decide that "They" is referring to "Bear Markets"?

You should only worry about the pronoun that refers to the subject of the preceding dependent clause.
Bear markets is the subject while individual investors is an object. If at all the sentence intends to modify object, the next will be a modifier sentence and not a complete sentence. As you can see that the first part is a dependent clause, and an independent sentence must follow after comma, they can only modify the main subject Bear markets.

Hope that's clear.