Rate of inflation : GMAT Verbal Section
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# Rate of inflation

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Director
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25 Sep 2008, 21:39
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when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?

A. The rate of inflation has risen

B. The investment in question is becoming less profitable

C. The investment in question is less profitable than the most profitable investment available

D. The rate of return on the most profitable investment available has declined

E. There has been a change in which particular investment happens to be the most profitable

Can we discuss?
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25 Sep 2008, 22:42
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nikhiljain05:
The premise states that in such circumstance the value of a particular investment declines by more than that percentage.

Therefore the percentage was ok before and now it declined from its previous mark, Can't we say it was profitable before and now became less profitable? Obviously, if rate of return declines, the profitability will diminish consequently.
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26 Sep 2008, 00:00
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priyankur_saha@ml.com wrote:
nikhiljain05:
The premise states that in such circumstance the value of a particular investment declines by more than that percentage.

Therefore the percentage was ok before and now it declined from its previous mark, Can't we say it was profitable before and now became less profitable? Obviously, if rate of return declines, the profitability will diminish consequently.

For priyankur_saha@ml.com
it says that a "value of a particular investment"
not "% of highest profitable investment"
so only the value for that particular investment has decreased
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26 Sep 2008, 21:03
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Thanks of the explanations. OA is C indeed.
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25 Sep 2008, 21:43
IMO B.
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25 Sep 2008, 22:04
(A)
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25 Sep 2008, 22:34
priyankur_saha@ml.com wrote:
when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?
A. The rate of inflation has risen
B. The investment in question is becoming less profitable
C. The investment in question is less profitable than the most profitable investment available
D. The rate of return on the most profitable investment available has declined
E. There has been a change in which particular investment happens to be the most profitable

Can we discuss?

IMO "C"
"A" is not possible because nowhere the author has mentioned a link b/n inflation rise/decline
he/she just talks about the rate of inflation
"B" could be the answer but if you "C" you will find that "C" can definitly be derived from the question "most profitable" Vs "investment in question "
Similarly i am not able to find a link of "D" and "E" with the question
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25 Sep 2008, 23:50
priyankur_saha@ml.com wrote:
when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?

A. The rate of inflation has risen

B. The investment in question is becoming less profitable

C. The investment in question is less profitable than the most profitable investment available

D. The rate of return on the most profitable investment available has declined

E. There has been a change in which particular investment happens to be the most profitable

Can we discuss?

IMO D.

Decline = (RoI - RoR)/RoR * 100

If RoI doesnt increase any further, & % has increased that means the denominator i.r. RoR has reduced. Simple math sense!
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26 Sep 2008, 00:39
Another C with the similar explanation as below.

nikhiljain05 wrote:
priyankur_saha@ml.com wrote:
nikhiljain05:
The premise states that in such circumstance the value of a particular investment declines by more than that percentage.

Therefore the percentage was ok before and now it declined from its previous mark, Can't we say it was profitable before and now became less profitable? Obviously, if rate of return declines, the profitability will diminish consequently.

For priyankur_saha@ml.com
it says that a "value of a particular investment"
not "% of highest profitable investment"
so only the value for that particular investment has decreased
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26 Sep 2008, 03:22
priyankur_saha@ml.com wrote:
when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?

A. The rate of inflation has risen

B. The investment in question is becoming less profitable

C. The investment in question is less profitable than the most profitable investment available

D. The rate of return on the most profitable investment available has declined

E. There has been a change in which particular investment happens to be the most profitable

Can we discuss?

IMO C)
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26 Sep 2008, 07:29
clear C
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26 Sep 2008, 07:38
priyankur_saha@ml.com wrote:
when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?

A. The rate of inflation has risen

B. The investment in question is becoming less profitable

C. The investment in question is less profitable than the most profitable investment available

D. The rate of return on the most profitable investment available has declined

E. There has been a change in which particular investment happens to be the most profitable

Can we discuss?

Holly Molly. All over the place.

B is good but C is the best. the word minimum is the key. Any investment will lose the minimum X percent. But if there are investments that decline by X+N percent it must be true that such investments are less profitable than the most profitable investment available.
Re: Rate of inflation   [#permalink] 26 Sep 2008, 07:38
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