Advertisement: Last year, Factorial Mutual Fund continued : GMAT Critical Reasoning (CR)
Check GMAT Club App Tracker for the Latest School Decision Releases http://gmatclub.com/AppTrack

 It is currently 07 Dec 2016, 13:03

# Chicago-Booth

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# Events & Promotions

###### Events & Promotions in June
Open Detailed Calendar

Author Message
TAGS:

### Hide Tags

VP
Status: Final Lap Up!!!
Affiliations: NYK Line
Joined: 21 Sep 2012
Posts: 1096
Location: India
GMAT 1: 410 Q35 V11
GMAT 2: 530 Q44 V20
GMAT 3: 630 Q45 V31
GPA: 3.84
WE: Engineering (Transportation)
Followers: 37

Kudos [?]: 518 [2] , given: 70

### Show Tags

07 Oct 2012, 12:53
2
KUDOS
00:00

Difficulty:

5% (low)

Question Stats:

81% (01:56) correct 19% (00:47) wrong based on 303 sessions

### HideShow timer Statistics

Advertisement: Last year, Factorial Mutual Fund continued its strong record of investment performance. Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets, nearly double the market return. Therefore, investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios.

The claim in the advertisement above is based on which of the following assumptions?

Factorial Fund is one of the oldest and largest mutual funds in the investment industry.

A substantial part of the 15% portfolio appreciation was attributable to the returns of Factorial Fund and this level of fund’s performance is likely to persist in the future.

Last year, Factorial Fund outperformed all other funds with similar style and investment objectives.

The Fund is suitable to all investors.

The fees charged by Factorial Fund are among the lowest in the investment industry.
[Reveal] Spoiler: OA
If you have any questions
New!
VP
Status: Final Lap Up!!!
Affiliations: NYK Line
Joined: 21 Sep 2012
Posts: 1096
Location: India
GMAT 1: 410 Q35 V11
GMAT 2: 530 Q44 V20
GMAT 3: 630 Q45 V31
GPA: 3.84
WE: Engineering (Transportation)
Followers: 37

Kudos [?]: 518 [0], given: 70

### Show Tags

07 Oct 2012, 12:54
The answer is very simple but can anyone give clear reasoning.
If you negate D the conclusion will fall apart.........
Senior Manager
Joined: 21 Jan 2010
Posts: 344
Followers: 2

Kudos [?]: 171 [0], given: 12

### Show Tags

07 Oct 2012, 21:50
Advertisement: Last year, Factorial Mutual Fund continued its strong record of investment performance. Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets, nearly double the market return. Therefore, investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios.

The claim in the advertisement above is based on which of the following assumptions?

Factorial Fund is one of the oldest and largest mutual funds in the investment industry.

A substantial part of the 15% portfolio appreciation was attributable to the returns of Factorial Fund and this level of fund’s performance is likely to persist in the future.

Last year, Factorial Fund outperformed all other funds with similar style and investment objectives.

The Fund is suitable to all investors.

The fees charged by Factorial Fund are among the lowest in the investment industry.

The assumption is that the fund will continue to perform in the same was as in the past. B wins.
VP
Status: Final Lap Up!!!
Affiliations: NYK Line
Joined: 21 Sep 2012
Posts: 1096
Location: India
GMAT 1: 410 Q35 V11
GMAT 2: 530 Q44 V20
GMAT 3: 630 Q45 V31
GPA: 3.84
WE: Engineering (Transportation)
Followers: 37

Kudos [?]: 518 [0], given: 70

### Show Tags

07 Oct 2012, 22:51
I agree with your point and the same thought i also have , but my question is whats wrong with the assumption that " it will poerform in same manner woth all investors" you negate it and conclusion will not stand
lets try
Conclusion : Investors should invest in fund if they want to book profit
Negate: It will not perform in same manner to all i.e. profit can be varying for investors
hence the conclusion falls

Correct me if i am wrong these are closely placed answers and to master gmat we need to master shell game of gmat
these options can play crucial role in tight time constrain.
Hence i bit wary about it nad want to have clear understanding
BSchool Forum Moderator
Status: Flying over the cloud!
Joined: 16 Aug 2011
Posts: 912
Location: Viet Nam
GMAT Date: 06-06-2014
GPA: 3.07
Followers: 72

Kudos [?]: 589 [0], given: 44

### Show Tags

08 Oct 2012, 09:18
Choice B correctly solve the problem. The rate of return will keep unchanging in the future.
_________________

Rules for posting in verbal gmat forum, read it before posting anything in verbal forum
Giving me + 1 kudos if my post is valuable with you

The more you like my post, the more you share to other's need

CR: Focus of the Week: Must be True Question

Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 3637
Followers: 1247

Kudos [?]: 5644 [3] , given: 60

### Show Tags

08 Oct 2012, 12:50
3
KUDOS
Expert's post
Archit143 wrote:
Advertisement: Last year, Factorial Mutual Fund continued its strong record of investment performance. Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets, nearly double the market return. Therefore, investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios.

The claim in the advertisement above is based on which of the following assumptions?
(A) Factorial Fund is one of the oldest and largest mutual funds in the investment industry.
(B) A substantial part of the 15% portfolio appreciation was attributable to the returns of Factorial Fund and this level of fund’s performance is likely to persist in the future.
(C) Last year, Factorial Fund outperformed all other funds with similar style and investment objectives.
(D) The Fund is suitable to all investors.
(E) The fees charged by Factorial Fund are among the lowest in the investment industry.

Dear Archit143,

It seems you understand that (B) is the strongest answer, but you want to know what is wrong with (D).

First of all, I will say: you are missing the forest for the trees. You are getting so caught on picayune details that you are missing the big picture. This tells me you have too much experience with GMAT CR arguments and not enough experience with real-world arguments. It appears you have hit a point of diminishing returns with GMAT CR questions, at which the study of them can do as much harm as good. You really need to balance your perspective by getting an excellent grounding in real world economic arguments. Read the WSJ, the NYT, and the Economist magazine. Read about the real push-and-pull in the world. That will give you the broader perspective you are missing right now.

In this problem --- the broader perspective is: this guy wants to sell me this mutual fund. His evidence --- "Investors who included Factorial Fund in their portfolios realized an average capital gain of 15% across all of their investment assets" ---- wait a moment! Huge logical leap! If those folks had several stocks & bonds & funds in their portfolio besides Factorial Fund, why on earth would we attribute the success of the portfolio overall to the presence of Factorial Fund. If I own, say, $200 in Factorial Fund and$5000 in Apple, and the Apple goes through the roof, yes, I make a big profit, but what does that profit have to do with the little bit of Factorial Fund I had? That is the huge gaping hole in this argument. That is precisely the hole that needs to be addressed. That's why (B) is the clear choice for the correct answer.

As for (D), check your own assumptions and careful reading. The argument does not say: "investors interested in high returns should add Factorial Mutual Fund to their portfolios." (That would be way to strong for the CR section.) Rather, it says: "investors interested in high returns should consider adding Factorial Mutual Fund to their portfolios." Presumably, a big part of what each investor should consider is whether Factorial Fund is suitable to her own portfolio. Therefore, automatic suitability is not an assumption. ----------- Suppose (D) is not correct: suppose Factorial Fund is suitable, say, for 98% of investors, but not that last 2%. How much do you know about real-world advertising? Well, any ad that appeals to 98% of the population is an unbelievably successful ad, successful beyond all reasonable expectations! If Factorial Fund is really as good as the Advertisement claims --- that is to say, if assumption (B) is really true --- then indeed every investor should consider it, simply because it's so good, and only those investors who find it is not suitable for their portfolios should choose not to include it --- in other words, finding out it's not suitable would be the one and only one reason not to include it. Those are all interpretations by which (D) can be false and the argument can still retain its full strength. (D) is in no way an assumption upon which the strength of the argument depends.

Does all this make sense?

Mike
_________________

Mike McGarry
Magoosh Test Prep

VP
Status: Final Lap Up!!!
Affiliations: NYK Line
Joined: 21 Sep 2012
Posts: 1096
Location: India
GMAT 1: 410 Q35 V11
GMAT 2: 530 Q44 V20
GMAT 3: 630 Q45 V31
GPA: 3.84
WE: Engineering (Transportation)
Followers: 37

Kudos [?]: 518 [0], given: 70

### Show Tags

08 Oct 2012, 18:12
What an explanation
thanks Mike
And you have correctly pointed out my weakness i too feel the same, trying to improve
thanks again
GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10439
Followers: 886

Kudos [?]: 191 [0], given: 0

### Show Tags

10 Jul 2014, 11:00
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
GMAT Club Legend
Joined: 01 Oct 2013
Posts: 10439
Followers: 886

Kudos [?]: 191 [0], given: 0

### Show Tags

21 Mar 2016, 09:52
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
Similar topics Replies Last post
Similar
Topics:
According to mutual fund sales experts, a successful year for a stoc 4 16 Feb 2016, 08:35
Advertisement: Last year, Factorial Mutual Fund continued it 2 09 Feb 2014, 14:50
3 President: Over the last twenty years, the army’s funding 3 09 Aug 2013, 19:59
10 Many managers of mutual funds proclaim that they have been 25 03 Oct 2009, 10:21
Following several years of declining advertising sales, the 0 18 Aug 2008, 17:24
Display posts from previous: Sort by