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Which of the following best completes the passage below? As

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Which of the following best completes the passage below? As [#permalink]

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10 Sep 2005, 05:44
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Which of the following best completes the passage below?

As long as savings deposits are insured by the government, depositors will have no incentive to evaluate the financial strength of a savings bank. Yield alone will influence their choice of bank. To attract deposits, banks will be forced to offer the highest possible interest rates. And since paying higher rates inevitably strains the financial strength of a bank, ______

(A) the government will be forced o impose limitations on interest rates
(B) deposit insurance will ultimately lead to the financial weakening of many banks
(C) savers will be forced to choose between deposit insurance and higher interest rates
(D) deposits will tend to go to the banks with the greatest financial strength
(E) bank profits will tend to rise to ever-higher levels
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10 Sep 2005, 05:48
Looks D to me.
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10 Sep 2005, 13:29
D it is.....
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hey ya......

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10 Sep 2005, 14:07
B for me
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10 Sep 2005, 16:19
If interest rates are the only way banks can compete, it will inevitably cause banks to over extend themselves in an attempt to attract deposits. I would say B.
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10 Sep 2005, 16:22
B.
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11 Sep 2005, 02:55

"D" doesn't match with the "And since paying higher rates inevitably strains the financial strength of a bank,"
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12 Sep 2005, 09:13
I think the answer is A.

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12 Sep 2005, 11:56
I'll go with A. It talks about the interest rate.

To attract deposits, banks will be forced to offer the highest possible interest rates. And since paying higher rates inevitably strains the financial strength of a bank the government will be forced to impose limitations on interest rates
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13 Sep 2005, 02:28
A uses extreme language. My money is on D.
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13 Sep 2005, 02:34
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13 Sep 2005, 02:56
Id go with D too!
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13 Sep 2005, 07:22
B for me
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13 Sep 2005, 16:14
(B)

1. Government insures deposit.
2. so, banks will be forced to increase rates to attract customers.
3. and this strains the financial strength of the banks.

=> deposit insurance will ultimately lead to the financial weakening of many banks
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13 Sep 2005, 16:25
B.

go "just a notch" above the premises in the argument. A is leap-frogging.
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17 Sep 2005, 03:42
D for me.

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