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Manager
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stock [#permalink] New post 27 Sep 2007, 13:41
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.


Please explain the reason for selecting an answer over others.
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Re: stock [#permalink] New post 27 Sep 2007, 14:20
lnaik 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.

Please explain the reason for selecting an answer over others.


C. we cannot say anything other than C because if the inside purchase goes up, then the price is also supposed to go up.
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Re: stock [#permalink] New post 27 Sep 2007, 14:51
lnaik 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.


Please explain the reason for selecting an answer over others.



C.

Its easier to visualize this if you just make a ratio: S=sales of inside. P=purchases of inside stocks.

When S/P is less than 2/1 or <2/1. then the price is said to go up.

The ratio now (according to the passage) is S/P=1/9.

1/9<2/1 So we can conclude that the price will go up.
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 [#permalink] New post 27 Sep 2007, 15:15
stem:
sale/purchase=2/1 if it decreases then prices go up thus C. might be predictable. price is falling then corporations start purchasing their own stock leaving less suply in the market which then leads to a price increase.

so C
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Re: stock [#permalink] New post 27 Sep 2007, 16:42
lnaik 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?


Please explain the reason for selecting an answer over others.


Also C for the same reason as others' here.

E is an easy trap. But the last sentence only means that those officers and directors buy a lot more, doesn't mean that they buy most of the company's stocks.
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Re: stock [#permalink] New post 27 Sep 2007, 18:42
lnaik 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.


Please explain the reason for selecting an answer over others.


C
Premise - if sell/buy < 2, price will increase, current sell/buy = 1/9 so price will increase soon.
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Re: stock [#permalink] New post 11 Nov 2011, 04:34
laxieqv wrote:
lnaik 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?


Please explain the reason for selecting an answer over others.


Also C for the same reason as others' here.

E is an easy trap. But the last sentence only means that those officers and directors buy a lot more, doesn't mean that they buy most of the company's stocks.



Hi, A serious question here... Pls clarify, How would you confirm that nine times stock bought will contribute to most of the company's stocks. It depends on the company, right? And also, nowhere it is given that, they buy only little of the stocks available. They commonly buy, is what is given.
Thanks!
Re: stock   [#permalink] 11 Nov 2011, 04:34
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