CR Practice test question #13

[missionmba]

The cost of certain types of investments, such as stocks and real estate, is affected by the public’s tendency to want to be part of the pack; if a particular stock is bought by high-profile investors, the public may rush to follow suit, thereby -----.

Which of the following best completes the passage above?


limiting the number of shares available for purchase by institutional investors

driving up the price of the stock

reducing the possibility that the stock will earn high profits

putting pressure on the company to pay higher dividends

endangering the stock offerings of new companies



B

[raunekk]

imo B

[codesnooker]

Simple Logic!!!

A) limiting the number of shares available for purchase by institutional investors
WRONG No one is talking about Institutional investors. (Out of Scope = OS)

B) driving up the price of the stock
CORRECT How?

1. Author talked about cost.
2. It also tells when people see high profile buyers buying a certain stock then tend to buy it and once people started buying certain stock its price naturally shoots up.

C) reducing the possibility that the stock will earn high profits
WRONG (OS, didn't talk about profits anywhere)

D) putting pressure on the company to pay higher dividends
WRONG (OS)

E) endangering the stock offerings of new companies
WRONG (OS)

[yingli]

IMO B

[peter.p.81]

Guys can anyone give a decent reason why B is not right