Corporate officers and directors commonly buy and sell, for : GMAT Critical Reasoning (CR)
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# Corporate officers and directors commonly buy and sell, for

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27 Dec 2007, 03:28
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Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.

(B) Inside purchases of MEGA stock are about to cease abruptly.

(C) The price of MEGA stock will soon begin to go up.

(D) The price of MEGA stock will continue to drop, but less rapidly.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.

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27 Dec 2007, 05:35
eh .... I would say D. Ratio of sales to purchases is decreasing ... so stock price will keep decreasing unless more sales are made
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27 Dec 2007, 06:59
tarek99 wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.

(B) Inside purchases of MEGA stock are about to cease abruptly.

(C) The price of MEGA stock will soon begin to go up.

(D) The price of MEGA stock will continue to drop, but less rapidly.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.

"Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. "

In the given scenario, the ratio is 1:9, hence we predict that the stock prices will go up

C
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27 Dec 2007, 08:36
parsifal wrote:
tarek99 wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.

(B) Inside purchases of MEGA stock are about to cease abruptly.

(C) The price of MEGA stock will soon begin to go up.

(D) The price of MEGA stock will continue to drop, but less rapidly.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.

"Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. "

In the given scenario, the ratio is 1:9, hence we predict that the stock prices will go up

C

Agreed, the ratio is 1:9 so price will go up.
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27 Dec 2007, 08:53
tarek99 wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.-There is no indication of imbalance

(B) Inside purchases of MEGA stock are about to cease abruptly.-cease and abruptly is extreme. No indication.

(C) The price of MEGA stock will soon begin to go up. Seems most likely since the ratio is way below 2 is to 1.

(D) The price of MEGA stock will continue to drop, but less rapidly.-The opposite is concluded in the problem statement

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.- There is no information on how many shares are outstanding

Go with C
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27 Dec 2007, 22:58
tarek99 wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.

(B) Inside purchases of MEGA stock are about to cease abruptly.

(C) The price of MEGA stock will soon begin to go up.

(D) The price of MEGA stock will continue to drop, but less rapidly.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.

Go with C too,

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.

----> cant be logical conclusion, because the question does not give info about factors that determine imbalance b/w sales and purshases.

(B) Inside purchases of MEGA stock are about to cease abruptly.

----> same as A

(C) The price of MEGA stock will soon begin to go up.

----> Bingo! If Sales/Purchase ratio is less than 2, the Price goes UP. The text in red implies that the Sales/Purchase ratio is 1/9 (below 2), so according to the question the price should go UP.

(D) The price of MEGA stock will continue to drop, but less rapidly.

----> we can not say that for sure, because we dont know what factors cause the disbalance, those unknown factors may persist, then YES price will drop even further, or those factors may stop having effect, then NO price will not drop. Thus D is not best supported conclusion.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.

-----> out of scope
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30 Dec 2007, 09:02
OA must definetely be C...although it is confusing..

the ratio is sales\purchase, while in the second part of the argument it is inverted...
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01 Jan 2008, 00:59
OA is C
Re: CR: Corporate Officers   [#permalink] 01 Jan 2008, 00:59
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