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Most large corporations in the United States were once run

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Most large corporations in the United States were once run [#permalink] New post 11 Jan 2010, 12:28
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Most large corporations in the United States were once run by individual capitalists who owned enough stock to dominate the board of directors and dictate company policy. Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies. Today, with few exceptions, the stock of large United States corporations is held by large institutions-pension funds, for example-and because these institutions are prohibited by antitrust laws from owning a majority of a company's stock and from actively influencing a company's decision-making, they can enhance their wealth only by buying and selling stock in anticipation of fluctuations in its value. A minority shareholder is necessarily a short term trader. As a result, United States productivity is unlikely to improve unless shareholders and the managers of the companies in which they invest are encouraged to enhance long-term productivity (and hence long-term profitability), rather than simply to maximize short term profits.

Since the return of the old-style capitalist is unlikely, today's short-term traders must be remade into tomorrow's long-term capitalistic investors. The legal limits that now prevent financial institutions from acquiring a dominant shareholding position in a corporation should be removed, and such institutions encouraged to take a more active role in the operations of the companies in which they invest. In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares. Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet and, like the old-time capitalists, major investors could cut their losses only by helping to restore their companies' productivity. Such measures would force financial institutions to become capitalists whose success depends not on trading shares at the propitious moment, but on increasing the productivity of the companies in which they invest.
88. In the passage, the author is primarily concerned with doing which of the following?
(A) Comparing two different approaches to a problem
(B) Describing a problem and proposing a solution
(C) Defending an established method
(D) Presenting data and drawing conclusions from the data
(E) Comparing two different analyses of a current situation

89. It can be inferred from the passage that which of the following is true of majority shareholders in a corporation?
(A) They make the corporation's operational management decisions.
(B) They are not allowed to own more than fifty percent of the corporation's stock.
(C) They cannot make quick profits by selling their stock in the corporation.
(D) They are more interested in profits than in productivity.
(E) They cannot sell any of their stock in the corporation without giving the public advance notic.

90. According to the passage, the purpose of the requirement suggested in lines 30-33 would be which of the
following?
(A) To encourage institutional stockholders to sell stock that they believe will decrease in value
(B) To discourage institutional stockholders from intervening in the operation of a company whose stock they
own
(C) To discourage short-term profit-taking by institutional stockholders
(D) To encourage a company's employees to take an active role in the ownership of stock in the company
(E) To encourage investors to diversify their stock holdings

91. The author suggests that which of the following is a true statement about people who typify the “old style
capitalist" referred to in line 23?
(A) They now rely on outdated management techniques.
(B) They seldom engaged in short-term trading of the stock they owned.
(C) They did not influence the investment policies of the corporations in which they invested.
(D) They now play a much smaller role in the stock market as a result of antitrust legislation.
(E) They were primarily concerned with maximizing the short-term profitability of the corporations in which they
owned stock.

92. It can be inferred that the author makes which of the following assumptions about the businesses once controlled
by individual capitalists?
(A) These businesses were less profitable than are businesses today.
(B) Improving long-term productivity led to increased profits.
(C) Each business had only a few stockholders.
(D) There was no short-term trading in the stock of these businesses.
(E) Institutions owned no stock in these companies.

93. The author suggests that the role of large institutions as stockholders differs from that of the “old-style capitalist”
in part because large institutions
(A) invest in the stock of so many companies that they cannot focus attention on the affairs of any single corporation
(B) are prohibited by law from owning a majority of a corporation’s stock
(C) are influenced by brokers who advise against long-term ownership of stocks
(D) are able to put large amounts of stock on the market without depressing the stock’s value
(E) are attracted to the stocks of corporations that demonstrate long-term gains in productivity

94. The primary function of the second paragraph of the passage is to
(A) identify problems
(B) warn of consequence
(C) explain effects
(D) evaluate solutions
(E) recommend actions


how to attempt 89, 90 & 92
[Reveal] Spoiler:
B C C B B B E
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Re: STOCKS [#permalink] New post 12 Jan 2010, 03:27
88. B
89. C;
90. C;
91. B
92. B
93. B
94. E
Need to watch time...!
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Re: STOCKS [#permalink] New post 12 Jan 2010, 10:21
In 89 & 92 its inference questions. Plz suggest me how will u approach these questions. And in 90 why nt E?
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Re: STOCKS [#permalink] New post 15 Jan 2010, 06:04
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88. B
89. C
90. C
91. B
92. B
93. B
94. E

89. It can be inferred from the passage that which of the following is true of majority shareholders in a corporation?
(A) They make the corporation's operational management decisions. They can dictate policy but operational decisions were not made by them ( day to day decisions)
(B) They are not allowed to own more than fifty percent of the corporation's stock. this has not been discussed in the passage
(C) They cannot make quick profits by selling their stock in the corporation.Passage discusses this for capitalists : Because putting such large amounts of
(5) stock on the market would only depress its value, they
could not sell out for a quick profit and instead had to
concentrate on improving the long-term productivity of
their companies.
& explicitly states this for minority shareholder nt for the institutional "A
minority shareholder is necessarily a short term trader."

(D) They are more interested in profits than in productivity. these last two r just to fill options
(E) They cannot sell any of their stock in the corporation without giving the public advance notic.

92. It can be inferred that the author makes which of the following assumptions about the businesses once controlled
by individual capitalists?
(A) These businesses were less profitable than are businesses today.
(B) Improving long-term productivity led to increased profits.
lines in the passage says" United States productivity is unlikely to
improve unless shareholders and the managers of the
companies in which they invest are encouraged to
(20) enhance long-term productivity (and hence long-term
profitability),
rather than simply to maximize short term
profits."
This shld clear your doubt

(C) Each business had only a few stockholders.
(D) There was no short-term trading in the stock of these businesses.
(E) Institutions owned no stock in these companies.

Talking abt 90, passage says in lines 30 -33 that
"any institutionthat holds twenty percent or more of a company's
stock should be forced to give the public one day's
notice of the intent to sell those shares. " If they have to provide a notice prior to sale of stocks the, news of sale is already in the market and stock price will go down by the news of sale, more so by disclosing the -ve reason of the sale of stock,Thus, if and only if you have a +ve reason eg. Fund raising fr expansion then only you will go for sale; so this is to discourage short term profit making :)

Thus only c is right
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Re: STOCKS [#permalink] New post 16 Jan 2010, 13:25
Thanks Vageesh 4 ur help. I understood clearly where I made mistakes.

My problem is that I cannot recall the whole paragraph when I attempt questions n do lot of mistakes. I get only 50% correct answers everytime no matter what I do. I also did lot of practice on making short note of each para. but that also did not helped me because its time consuming. I already tried many other techniques on RC section bt my avg. performance is 50%. Can u plz suggest any foolproof method so that I get @ least 80% of what I do for now.

Thnx,
Bhartiindia.
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Re: STOCKS [#permalink] New post 17 Jan 2010, 00:17
Bharti.. i also have made similar mistakes in the past, but never tried to make notes as i really find that distracting, but now i have improved in tough passages too just because of continuous practice. I would suggest you two things
1) Do 2-3 passages in one sitting and pls do this practice at time when ur concentration is at its best.
2) Keep doing the first, dnt give up.
Results will come up
One more thing which is imp is to read passage with interest while focusing on the qualifiers.

If you have enough time then read different topics frm nytimes & economist.
Good luck
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Re: STOCKS [#permalink] New post 18 Jan 2010, 02:18
Thnx Vageesh for ur advice.I'll try to solve Rc again with ur method.

Regards,
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Re: STOCKS [#permalink] New post 25 Jan 2010, 16:26
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Hey All,

I just wanted to weigh in here, as there seems to be a discussion about the best way to improve on RC. I really have to weigh in against whoever said that you shouldn't take notes. Note taking is necessary, for a few reasons. First of all, studies show that you retain information much better just when holding a pen in your hand. The knowledge that you're going to force yourself to take notes WILL make you read better. Also, on longer passages, it can serve as a useful outline. Finally, note taking is a process you can improve at. If all you do is hundreds of questions, your gut may get better, but you have no process that can get streamlined. Take notes!

However, most people take notes incorrectly. I'd say the biggest mistake I see in class is students who try to write down the whole passage. This is time-consuming, and counter-productive. The idea is that you're decocting the passage down to its most important elements, not making a cheat sheet for a test (i.e. writing down all the facts in shorthand). As an example, here's how I would outline the passage at issue here.

Main Idea: To explain ways in which institutional investors can be encouraged to think long term, rather than short term.

Paragraph 1: History leading to present state. Investors more concerned with short term because uninvolved in day to day.

Paragraph 2: Ways to improve: make companies more active day to day, able to hold majority share, and announce sale in advance.

That right there is NOT much writing. You cannot argue that this is "too time consuming" to be worth doing. Remember that this is called Reading Comp for a reason. It's not just READING, but COMPREHENSION. If you take notes like a reader, you're not going to do well, and it's going to feel like a pointless exercise. If you take notes like a COMPREHENDER, you're going to find yourself doing better and better. Learn how to take notes that are entirely paraphrased, brief, and focused entirely on structure (rather than being bogged down in content/facts). I promise this will help.

Good luck!

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Re: STOCKS [#permalink] New post 25 Jan 2010, 21:52
Thanks Tommy for your advice, i will try that again, but it all depends on how well one masters this technique.. having said that one always has to go back & see the passage for detailed info. But i give points to you when you talk about longer passages, As you are an Instructor, must be having some logic :) will try this method today again.
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Re: STOCKS [#permalink] New post 26 Jan 2010, 00:21
Thanks Tommy Wallach for your advice. I think I should try again this technique with number of passages. So that I can master in the trick. This seems to be nice advice. Comprehend rather than pretend. Your notes are amazing. All in two lines. :)
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Re: STOCKS [#permalink] New post 26 Jan 2010, 11:29
Glad to help! If you end up having any other general RC questions, feel free to post them up in response here (I may miss a new topic!).

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Re: STOCKS [#permalink] New post 26 Dec 2010, 08:59
why 89 is not B?
Line 12 says so.
Thanks.
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Re: STOCKS [#permalink] New post 16 Jan 2011, 11:36
i made the same mistakes as bhartiindia. but now i get it. however i too am finding the note taking strategy time consuming. i mean u have to read the passage fully rite?? that will definitely consume time.

noboru wrote:
why 89 is not B?
Line 12 says so.
Thanks.

read carefully. it doesn't talk about majority shareholders. it talks abt institutions that are majority shareholders. meaning if the maj. shareholder is not an insti. he can own
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Re: STOCKS [#permalink] New post 24 Jan 2011, 15:45
I got BCCEDBE in 10mins.
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Re: STOCKS [#permalink] New post 23 Sep 2012, 20:55
I disagree on number 89. Answer C

The question states "Which of the following IS true of the majority sharholders in a corporation". Answer C refers to the individuals that could not sell large amounts of stock on the market. Those individuals once ran most large corporations (in the past.) I went for B, as the passage states that antitrust legislation bans ownership of a majority. Furthermore, the passage states that any institution that holds twenty percent or more of a company's stock SHOULD be forced to give the public one day's notice of the intent to sell those shares.

I really appreciate any comments on my post

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Re: Most large corporations in the United States were once run [#permalink] New post 19 Jan 2013, 00:19
Adding one more question:
The passage supports which of the following statements?
(A) Antitrust laws prevent any single shareholder from acquiring a majority of the stock in a corporation.
(B) Institutions that intend to sell a large block of stock in a single corporation must give at least twenty-four hours notice of the sale.
(C) In most corporations it is the board of directors rather than the corporate managers who make policy decisions.
(D) The sudden sale of a large amount of stock in any one corporation makes the value of the stock go down.
(E) The way corporations are currently run, it is unlikely that increased productivity would lead to short-term increases in stock values.
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Re: Most large corporations in the United States were once run [#permalink] New post 01 Feb 2013, 20:00
For the passage i got 89 th and 92 incorrect. For each passage i comprehend i get either 2 or 1 answer as incorrect.
I am still not able to get all answers correct for any of my practiced passage. On average i take 12 mins to solve a passage.
I follow taking short rough notes for each para and once i have finished the passage i go through the notes for say 45 to 60 secs
before attempting questions. I aim to finish a para in 9 mins with maximum 1 incorrect options.
Any suggestions would be helpful as i am not improving with the accuracy.
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Re: Most large corporations in the United States were once run [#permalink] New post 04 Jul 2014, 03:33
Thank you so much vageesh for the explanation. It really helped a lot to analyse my faults.
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Re: Most large corporations in the United States were once run [#permalink] New post 13 Jul 2014, 13:07
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What is the exact source of this RC ?
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Re: Most large corporations in the United States were once run [#permalink] New post 12 Aug 2014, 19:30
PrashantPonde wrote:
Adding one more question:
The passage supports which of the following statements?
(A) Antitrust laws prevent any single shareholder from acquiring a majority of the stock in a corporation.
(B) Institutions that intend to sell a large block of stock in a single corporation must give at least twenty-four hours notice of the sale.
(C) In most corporations it is the board of directors rather than the corporate managers who make policy decisions.
(D) The sudden sale of a large amount of stock in any one corporation makes the value of the stock go down.
(E) The way corporations are currently run, it is unlikely that increased productivity would lead to short-term increases in stock values.




Is the answer to the above question A or B ??
Please specify the reason for the correct answer
Re: Most large corporations in the United States were once run   [#permalink] 12 Aug 2014, 19:30
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