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# A large company has recently increased its dividend payment

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A large company has recently increased its dividend payments [#permalink]

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02 Jun 2013, 20:41
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A large company has recently increased its dividend payments to shareholders. Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, the shareholders' optimism may be ill-founded since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

In the argument above, the two bold-faced portions play which of the following roles?

a) The first is evidence that supports a conclusion; the second is that conclusion

b) The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.

c) The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.

d) The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.

e) The first is a premise that is accepted as true; the second seeks to clarify the original premise.
[Reveal] Spoiler: OA

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Re: A large company has recently increased its dividend payments [#permalink]

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02 Jun 2013, 23:08
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Let's try to understand the structure of the argument:

Premise 1: the company has recently increased its dividend payments - Boldface 1 (BF1)
Intermediate conclusion: Shareholders are now relieved since increasing dividends generally boosts a company's stock price.

Premise 2: spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run - Boldface 2 (BF2)
Main Conclusion: The shareholders' optimism may be ill-founded.

Now let's look at the choices.
A: BF2 is not the conclusion that BF1 supports. Incorrect.
C: BF2 is the explanation itself, and not evidence that supports it.
D: BF2 does not contradict the given premise BF1
E: BF1 is the original premise - BF2 is not clarifying the premise itself. It is trying to explain why a conclusion made based on BF1 is possibly incorrect.

This leaves us with the right answer B.
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Re: A large company has recently increased its dividend payments [#permalink]

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24 Mar 2014, 01:39
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B.The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
BF1 doesn't support the conclusion.

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Re: A large company has recently increased its dividend payments [#permalink]

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24 Mar 2014, 04:11
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Why is B the right answer? In what universe does the fact in BF1 support the conclusion??

Can someone pls elaborate on this.

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Re: A large company has recently increased its dividend payments [#permalink]

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24 Mar 2014, 06:28
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hi pipe19,
let me try to answer you.
the first boldface(BF1) says company is giving more dividends. this a premise or "FACT". the argument says that share holders think that it is a good sign and stock prices are going to increase. this is the conclusion. the second premise(the whole line along with BF2) states that the conclusion might be wrong because it might be a last ditch effort.
let us look at the options

a) The first is evidence that supports a conclusion; the second is that conclusion
Wrong , the conclusion here is that which is drawn by shareholders. i.e. increasing evidence boosts the stock price. so the second boldface is not the conclusion.

b) The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
right answer, accurately describes the scenario.

c) The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
the first is not a circumstance, it is evidence. the evidence is never explained, it is just taken to form a conclusion and later BF2 is given which questions the validity of the conclusion.

d) The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
the first part is true. the second is not the conclusion, it is another premise which gives an alternate explanation for the premise.

e) The first is a premise that is accepted as true; the second seeks to clarify the original premise.
the first part is right. the second does not clarify the premise, rather it tries to clarify the conclusion drawn from the premise.

hope this helps
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Re: A large company has recently increased its dividend payments [#permalink]

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24 Mar 2014, 11:39
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I see what you mean. Because there is a stated connection between BF1 and a premise that supports a conclusion you can say that BF1 supports this conclusion. Thanks!

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Re: A large company has recently increased its dividend payments [#permalink]

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05 Apr 2014, 13:51
Large company has recently increased its dividend payments to shareholders. ( evidence )
Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. ( explaining scenario ) ( cause and effect -- increased div -- boosts stock price )
However,
Conclusion::: the shareholders' optimism may be ill-founded ( how come above evidence says that shareholder optimism is ill founded)

E should be the right answer..
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Re: A large company has recently increased its dividend payments [#permalink]

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05 Apr 2014, 23:29
vinzycoolfire wrote:
hi pipe19,
let me try to answer you.
the first boldface(BF1) says company is giving more dividends. this a premise or "FACT". the argument says that share holders think that it is a good sign and stock prices are going to increase. this is the conclusion. the second premise(the whole line along with BF2) states that the conclusion might be wrong because it might be a last ditch effort.
let us look at the options

a) The first is evidence that supports a conclusion; the second is that conclusion
Wrong , the conclusion here is that which is drawn by shareholders. i.e. increasing evidence boosts the stock price. so the second boldface is not the conclusion.

b) The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
right answer, accurately describes the scenario.

c) The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
the first is not a circumstance, it is evidence. the evidence is never explained, it is just taken to form a conclusion and later BF2 is given which questions the validity of the conclusion.

d) The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
the first part is true. the second is not the conclusion, it is another premise which gives an alternate explanation for the premise.

e) The first is a premise that is accepted as true; the second seeks to clarify the original premise.
the first part is right. the second does not clarify the premise, rather it tries to clarify the conclusion drawn from the premise.

hope this helps

Confused ??

In option B : the conclusion which author has mentioned is an intermediate conclusion , But I read everywhere that we need to establish / seek author's main conclusion, which in this question is stake holder optimism is ...

Will some 1 explained ..?
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Re: A large company has recently increased its dividend payments [#permalink]

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06 Apr 2014, 01:59
There is only one conclusion in this sentence.

(Neutral evidence)A large company has recently increased its dividend payments to shareholders. (Description of a state)(evidence provided in first sentence makes this state more believable)Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, (Conclusion)the shareholders' optimism may be ill-founded (Premise supporting main conclusion) since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

b) The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
Evidence supports a conclusion... no.. evidence is neutral in nature and it makes premise following it much believable... Thus it is not linked with conclusion... if we consider that second half of option B is refereeing to Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. as support ... and it is questioning this part ... then second half of option B looks valid..
Overall this option is not correct... not as clear as GMAT level option.

e) The first is a premise that is accepted as true; the second seeks to clarify the original premise.

The first is a premise that is accepted as true :: something accepted as true is an evidence a fact... Ok
The second seeks to clarify the original premise :: if "Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price." is original premise and second bold part is clarifying that shareholders believe (optimism) will not sustain in long run...Then E is much much better than any other answer choice.
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A large company has recently increased its dividend payment [#permalink]

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12 Apr 2014, 18:49
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A large company has recently increased its dividend payments to shareholders. Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, the shareholders' optimism may be ill-founded since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

In the argument above, the two bold-faced portions play which of the following roles?

The first is evidence that supports a conclusion; the second is that conclusion
The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
The first is a premise that is accepted as true; the second seeks to clarify the original premise.
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Re: A large company has recently increased its dividend payment [#permalink]

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17 May 2014, 06:03
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Can someone explain why B is the correct answer?

Premise 1 - A large company has recently increased its dividend payments to shareholders.

Premise 2 - Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price.

( I do not see this as a Sub-Conclusion )

Premise 3 - spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

Conclusion -" the shareholders' optimism may be ill-founded "

Premise 3 Does not question the support rather is acts as the basis on which the conclusion is derived? Need Help in understanding where I am wrong.

Mountain14 wrote:
A large company has recently increased its dividend payments to shareholders. Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, the shareholders' optimism may be ill-founded since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

In the argument above, the two bold-faced portions play which of the following roles?

The first is evidence that supports a conclusion; the second is that conclusion
The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
The first is a premise that is accepted as true; the second seeks to clarify the original premise.

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A large company has recently increased its dividend payment [#permalink]

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24 Jul 2014, 08:03
The conclusion is " the shareholders' optimism may be ill-founded".
How does the first boldface support this conclusion? My choice was C.

Karishma, Can you help with this please?

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Re: A large company has recently increased its dividend payment [#permalink]

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13 Aug 2014, 01:18
Mountain14 wrote:
A large company has recently increased its dividend payments to shareholders. Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, the shareholders' optimism may be ill-founded since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

In the argument above, the two bold-faced portions play which of the following roles?

The first is evidence that supports a conclusion; the second is that conclusion
The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
The first is a premise that is accepted as true; the second seeks to clarify the original premise.

C seems to be a clear choice for me here. How is B the evidence of a conclusion. Clearly, the conclusion is that shareholder's optimism may be ill-founded. The perception that the stock price will increase may be found false. If this is the right conclusion, howcome the first sentence becomes an evidence. It is indeed the circumstance as I see it, to an argument that is being sought to be explained. While the second agrument clearly explains the argument established. Strongly feel the correct answer should be C.

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Re: A large company has recently increased its dividend payment [#permalink]

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04 Mar 2015, 22:03

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A large company has recently increased its dividend payment [#permalink]

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09 Mar 2015, 00:34
pkhats wrote:
Can someone explain why B is the correct answer?

Premise 1 - A large company has recently increased its dividend payments to shareholders.

Premise 2 - Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price.

( I do not see this as a Sub-Conclusion )

Premise 3 - spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

Conclusion -" the shareholders' optimism may be ill-founded "

Premise 3 Does not question the support rather is acts as the basis on which the conclusion is derived? Need Help in understanding where I am wrong.

Mountain14 wrote:
A large company has recently increased its dividend payments to shareholders. Shareholders had previously been worried about the company's stock price, but are now relieved since increasing dividends generally boosts a company's stock price. However, the shareholders' optimism may be ill-founded since spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run.

In the argument above, the two bold-faced portions play which of the following roles?

The first is evidence that supports a conclusion; the second is that conclusion
The first describes evidence that supports a conclusion; the second gives a reason for questioning that support.
The first describes the circumstance that the argument seeks to explain; the second provides evidence in support of the explanation that the argument seeks to establish.
The first is a premise that is accepted as true; the second is a conclusion that is contrary to the premise.
The first is a premise that is accepted as true; the second seeks to clarify the original premise.

the conclusion is 'since increasing dividends generally boosts a company's stock price' and the first bold statement support it whereas the second bold gives a reason to question it.
why the second statement after 'since' is not conclusion ? because the second bold face 'spending money on the payment of dividends often indicates' has often word in it which means sometime it happens and sometime it doesnt , whereas first 'since' stmt is more accepted fact and there is no doubt on that .
i recommend you to read through powerscore CR , they have discussed these concepts very thoroughly.
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Re: A large company has recently increased its dividend payment [#permalink]

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24 Apr 2015, 06:37
should not be B.

the second gives a reason for questioning that support. --> spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run. The argument is not attacking the support ( that A large company has recently increased its dividend payments to shareholders). It is considering at its face value and accepting it as true but saying that there must be another reason why company has increased the dividend payment.

Should be D IMO. spending money on the payment of dividends often indicates that the company has exhausted more lucrative investments for its cash reserves and that the stock price will likely fall in the longer run. --> This argument clearly attacking or giving some extra premises about first statement.

carcass or some other verbal expertise pl help.

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Re: A large company has recently increased its dividend payments [#permalink]

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29 Sep 2015, 15:28
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A large company has recently increased its dividend payment [#permalink]

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08 Jan 2017, 20:28
Quite similar to OG16 CR #105.

Since it has become known that several of a bank’s top executives have been
buying shares in their own bank
, the bank’s depositors, who had been worried
by rumors that the bank faced impending financial collapse, have been greatly
relieved. They reason that, since top executives evidently have faith in the bank’s
financial soundness, those worrisome rumors must be false. Such reasoning might
well be overoptimistic, however, since corporate executives have been known
to buy shares in their own company in a calculated attempt to dispel
negative rumors about the company’s health.

In the argument given, the two boldfaced portions play which of the following
roles?
(A) The first describes evidence that has been taken as supporting a
conclusion; the second gives a reason for questioning that support.
(B) The first describes evidence that has been taken as supporting a
conclusion; the second states a contrary conclusion that is the main
conclusion of the argument.
(C) The first provides evidence in support of the main conclusion of the
argument; the second states that conclusion.
(D) The first describes the circumstance that the argument as a whole seeks
to explain; the second gives the explanation that the argument seeks to
establish.
(E) The first describes the circumstance that the argument as a whole seeks
to explain; the second provides evidence in support of the explanation that
the argument seeks to establish.

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Re: A large company has recently increased its dividend payment [#permalink]

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12 Feb 2017, 19:23
Hello,

Can you please suggest, what will be conclusion here?

Because here 2 scenarios are explained, one positive , one negative so i am not able to apply" therefore test " also.

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Re: A large company has recently increased its dividend payment [#permalink]

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12 Feb 2017, 19:26
In my experience, I believe that C is the better answer. I believe "However, the shareholders' optimism may be ill-founded" is the conclusion.

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Re: A large company has recently increased its dividend payment   [#permalink] 12 Feb 2017, 19:26

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