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The fiscal year--- yet another new Praradox Q from gmatclub

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The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 14 Nov 2013, 00:23
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Question Stats:

64% (02:58) correct 36% (02:17) wrong based on 158 sessions
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The fiscal year (April to March) ended 2010-2011 was a bumper year for Sindian Bank as far as profits were concerned. On total revenue of income interest and non-income interest of $4B, the net profits stood at $1.3B. In contrast, the previous fiscal’s profits (2009 -2010 net profits were hardly $600M on revenues of $4.2B. Investors felt after the new fiscal’s financial results were declared that, that the bank was riding a high wave while the analysts were not enthused. They decried that the bonanza of 2010-2011 was a flash in the pan.

Which of the following events, if true, can prove that the analysts were indeed right in their paradoxical findings?

A. The RBI appointed a new chairman cum MD in April 2011 for the said Bank.
B. During October 2010 to Feb 2014 the high-fly new banking chairman took on business exploration trips from Alaska to Antarctica, from Jamaica to Bangkok and from Alps to Andes, resulting in an expenditure of $300M and some old customers withdrawing their deposits.
C. In June 2009, The national Housing Bank, an overseer bank for institutions that offer housing finance, impounded $800M as doubtful assets on some difference of opinion about definition of doubtful assets, which was ordered to be released by the Supreme Court in December 2010.
D. In order improve business; the New chairman sanctioned $2B worth loans to some film production units, whose films bombed at box-office.
E. The old chairman of the bank was elevated to the post of Deputy Governor of Reserve bank following his transfer from Sindian Bank
[Reveal] Spoiler: OA

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Last edited by daagh on 25 Nov 2013, 07:27, edited 2 times in total.
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 09 May 2014, 07:28
Mr. Daagh, could we get the OE for this one please?

I went with C by POE, but I think that the answer choice is still a bit of a stretch

Please advice
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J :)
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 31 May 2014, 14:16
Give the freaking OE please!!

Cheers
J :)
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 10 Jun 2014, 08:27
jlgdr wrote:
Give the freaking OE please!!

Cheers
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Now that you know you're right, can you explain how you got to your solution?
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 14 Jun 2014, 02:59
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jlgdr wrote:
Give the freaking OE please!!

Cheers
J :)


Let me try and give my explanation for this one.


First let us identify what the question is asking. At its simplest , it is asking for a supporting evidence ( of event) to confirm analyst's finding. Now what was the analyst finding - it was that the profit was a fluke/flash in a pan/not something which might happen again on a sustainable basis.

Now analysing the options

a) RBI appointed a new chairman / MD for the bank -- Agree that this will not happen every year so the once off profit could be attributed to the initial euphoria of a new head honcho but still not 100% conclusive. Will keep it in contention.

b) high profile business trips , old customers leaving the bank -- This , if not anything is contrary to the fact that there would have been profits . so out right rejected.

c) Release of funds - Some funds which were wrongfully taken from the bank in past were released this year thereby contributing to its bottom line. Looks like a very strong contender to support the claim of analyst that this won't happen evey year .

d) Film funding -- Starts on a good note but the bombing of the films is contrary to the fact that banks had a profit this year.

e) Old chairman elevated to Deputy governor -- Like a this is a once off event which potentially could cause the bank to show temporary profits , for eg - stocks of the bank rising in values because of investors speculating that the new deputy governor might issue policies in support of his old org.


Now we see that a, c and e are the possible candidates to explain the analyst's paradoxical thoughts. Out of these 3 , only c is conclusive , fact ridden so I would choose c. A and E are giving vague indicators and need to be supplemented by extra assumptions to explain the profit of the bank.


Hope this helps :)
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 14 Jun 2014, 03:35
The answer seems to be C. The revenue in 10-11 did not increase and was only 4 b while profit increased to 1.3 B. In 09-10 revenue was more 4.28b but profit was just 600 M. Option C explains clearly the paradox by giving the source of increase in profits without increasing revenue.
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Re: The fiscal year--- yet another new Praradox Q from gmatclub [#permalink] New post 20 Jul 2014, 02:58
where grammer is going in this question. what "that, that" is doing in last sentence of the argument.
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Re: The fiscal year--- yet another new Praradox Q from gmatclub   [#permalink] 20 Jul 2014, 02:58
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