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# According to mutual fund sales experts, a successful year for a stoc

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According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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16 Feb 2016, 09:35
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Difficulty:

5% (low)

Question Stats:

95% (01:41) correct 5% (01:56) wrong based on 282 sessions

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According to mutual fund sales experts, a successful year for a stock fund should result not only in increased investor dollars flowing into the fund, but also in increased investor dollars flowing into other mutual stock funds offered by the same company. However, while last year the Grafton Mutual Company’s “Growth Stock Fund” beat average market returns by a factor of two and recorded substantial new investment, the other stock funds offered by Grafton did not report any increase whatsoever.

Which of the following conclusions can properly be drawn from the statements above?

(A) When one of the mutual funds offered by a company beats average market returns, the other mutual funds offered by that company will beat average market returns.

(B) The mutual fund sales experts neglected to consider bond funds in formulating their theory.

(C) The performance of the Grafton “Growth Stock Fund” was a result of a wave of mergers and acquisitions that year.

(D) Investors currently dislike all stock mutual funds because of market volatility.

(E) The success of one mutual fund is not the only factor affecting whether investors will invest in other mutual funds run by the same company.

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Re: According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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16 Feb 2016, 10:02
E seems to be close. Others look Out of scope.
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Re: According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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16 Feb 2016, 10:13
E seems like the only reasonable choice.
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Re: According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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16 Feb 2016, 10:32
carcass wrote:
According to mutual fund sales experts, a successful year for a stock fund should result not only in increased investor dollars flowing into the fund, but also in increased investor dollars flowing into other mutual stock funds offered by the same company. However, while last year the Grafton Mutual Company’s “Growth Stock Fund” beat average market returns by a factor of two and recorded substantial new investment, the other stock funds offered by Grafton did not report any increase whatsoever.

Which of the following conclusions can properly be drawn from the statements above?

(A) When one of the mutual funds offered by a company beats average market returns, the other mutual funds offered by that company will beat average market returns.

(B) The mutual fund sales experts neglected to consider bond funds in formulating their theory.

(C) The performance of the Grafton “Growth Stock Fund” was a result of a wave of mergers and acquisitions that year.

(D) Investors currently dislike all stock mutual funds because of market volatility.

(E) The success of one mutual fund is not the only factor affecting whether investors will invest in other mutual funds run by the same company.

The Mutual fund Company is company Growth Stock Fund with other stock funds of the same company. Despite substantial new investment in Growth Stock Fund there is no significant increase in investment in other mutual funds, the reason might be that the perceived/historic return of other mutual fund is not as high as that of Growth Stock Fund.

Option (E) correctly addresses this key issue hence , IMHO (E)
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Re: According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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16 Feb 2016, 12:23
According to mutual fund sales experts, a successful year for a stock fund should result not only in increased investor dollars flowing into the fund, but also in increased investor dollars flowing into other mutual stock funds offered by the same company

The first sentence of the stimulus do confirms just our conclusion.

So E is correct and is the only possible choice

Regards
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Re: According to mutual fund sales experts, a successful year for a stoc  [#permalink]

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23 Nov 2018, 01:31
Quote:
According to mutual fund sales experts, a successful year for a stock fund should result not only in increased investor dollars flowing into the fund, but also in increased investor dollars flowing into other mutual stock funds offered by the same company. However, while last year the Grafton Mutual Company’s “Growth Stock Fund” beat average market returns by a factor of two and recorded substantial new investment, the other stock funds offered by Grafton did not report any increase whatsoever.

Which of the following conclusions can properly be drawn from the statements above?

(A) When one of the mutual funds offered by a company beats average market returns, the other mutual funds offered by that company will beat average market returns.

(B) The mutual fund sales experts neglected to consider bond funds in formulating their theory.

(C) The performance of the Grafton “Growth Stock Fund” was a result of a wave of mergers and acquisitions that year.

(D) Investors currently dislike all stock mutual funds because of market volatility.

(E) The success of one mutual fund is not the only factor affecting whether investors will invest in other mutual funds run by the same company.

With any inference based CR question, what is important to remember is that you are supplying a conclusion of sorts on the basis of the given data. Hence, any inference you pick MUST be true on the basis of the truth of the other statements. Looking at this from the point of view of eliminating options, it means that any option that CAN be false can be eliminated.

A - Very much can be false, in fact, the opposite has been even indicated in the data given
B - We have no data on this, therefore anything is possible, and therefore its possible that this can be false
C - Same as B, no info means it certainly can be false
D - The use of the word "all" is what kills this option. If even one mutual fund is liked by investors despite the volatility, it negates the truth of this option

E - We have been told that investors decide the success on more than the performance of one mutual fund, and this is also what is indicated here. It's also not possible (from the given data) that the success of a single mutual fund is the only determining factor in any circumstance.

When solving inference based CR questions, always look for an answer that MUST be true, and eliminate any answer that CAN be false.
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Re: According to mutual fund sales experts, a successful year for a stoc   [#permalink] 23 Nov 2018, 01:31
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