Every time a business grants financial credit to an : GMAT Critical Reasoning (CR)
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# Every time a business grants financial credit to an

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16 Jul 2011, 08:14
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Difficulty:

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Question Stats:

59% (05:22) correct 41% (02:02) wrong based on 634 sessions

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Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual’s financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer’s right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

In the passage above, the author assumes which of the following?

A] It is difficult to quantify the risk involved in any single decision to grant credit.
B] Without the service provided by credit bureaus, businesses would have no factual basis for making credit decisions.
C] The financial data that credit bureaus supply to businesses is generally accurate.
D] It is difficult to reduce the complexities of an individual’s financial history to a computerized record.
E] Consumers, in general, tend to seek more credit than they can safely assume.
[Reveal] Spoiler: OA
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16 Jul 2011, 08:20
Chetangupta wrote:
Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual’s financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer’s right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

In the passage above, the author assumes which of the following?

It is difficult to quantify the risk involved in any single decision to grant credit.

Without the service provided by credit bureaus, businesses would have no factual basis for making credit decisions.

The financial data that credit bureaus supply to businesses is generally accurate.

It is difficult to reduce the complexities of an individual’s financial history to a computerized record.

Consumers, in general, tend to seek more credit than they can safely assume.

I think its C.
Negate the option
The financial data that credit bureaus supply to businesses is generally NOT accurate. This will surely make the conclusion (This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended) fall.
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16 Jul 2011, 08:44
Chetangupta wrote:
Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual’s financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer’s right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

In the passage above, the author assumes which of the following?

A) It is difficult to quantify the risk involved in any single decision to grant credit.
this one out because of strong wording (whole passage talks in can/could format)

B) Without the service provided by credit bureaus, businesses would have no factual basis for making credit decisions.
same reason as given for A

C) The financial data that credit bureaus supply to businesses is generally accurate.
here wording sounds alright (use of generally- not so strong), also if we validate the assumption by negation then whole conclusion stands contradicted ...so hold it for the moment if you have doubt about it being a contender
D) It is difficult to reduce the complexities of an individual’s financial history to a computerized record.
out of scope- no talk on this in the passage
E) Consumers, in general, tend to seek more credit than they can safely assume.
again not backed up in the passage given

So best possible choice is C
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21 Jul 2011, 12:51
One of the classic questions in which the answer is generally the option that states the data to be accurate
Chose C without much fuss
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02 Nov 2011, 13:29
C
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03 Nov 2011, 04:20
IMO-C

Initially i was a bit confused between C & E but it clear that the ans is C.
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23 Dec 2011, 21:39
Nice question. Long argument took up a lot of time. But C is the correct answer. Negating C makes the conclusion fall apart.
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26 Dec 2011, 04:14
no doubt has to be C
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06 Nov 2013, 07:32
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25 Oct 2014, 04:51
Don't think that this is a 700 question. No struggle in cruising to the answer choice

C
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02 Mar 2015, 07:47
C question was ok. But it is difficult to answer under 2 min
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26 Jul 2015, 09:15
Took 3:25 to mark C

Ruled out A,D and E,and was confused between B and C
applied negation technique on both B and C. negating C weaken the conclusion.
So marked c.
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08 Apr 2016, 18:38
Chetangupta wrote:
Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual’s financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer’s right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

In the passage above, the author assumes which of the following?

A] It is difficult to quantify the risk involved in any single decision to grant credit.
B] Without the service provided by credit bureaus, businesses would have no factual basis for making credit decisions.
C] The financial data that credit bureaus supply to businesses is generally accurate.
D] It is difficult to reduce the complexities of an individual’s financial history to a computerized record.
E] Consumers, in general, tend to seek more credit than they can safely assume.

if you negate C, the whole argument goes down. so definitely C is the answer.
Re: Every time a business grants financial credit to an   [#permalink] 08 Apr 2016, 18:38
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