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15 Jan 2020, 06:58
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A
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Difficulty:
15%
(low)
Question Stats:
79% (01:21) correct
21%
(01:32)
wrong
based on 1450
sessions
History
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Not Attempted Yet
Bonuses at DSR Industries cannot be awarded unless profits exceed a ten percent return on stockholders’ investments in the company. Higher profits mean higher bonuses. Therefore, bonuses in a year of general economic recession will be considerably lower than bonuses in a year of peak profits at DSR.
The conclusion above depends on the assumption that
(A) the firm will have relatively low profits in recession years
(B) the amount represented by a ten percent return on stockholders’ investments in the company will increase from year to year
(C) profits rarely exceed a ten percent return on stockholders’ investments in the company
(D) profits in excess of a ten percent return on stockholders’ investments in the company are all distributed in the form of bonuses
(E) bonuses at DSR never drop to zero
The conclusion above depends on the assumption that
(A) the firm will have relatively low profits in recession years
(B) the amount represented by a ten percent return on stockholders’ investments in the company will increase from year to year
(C) profits rarely exceed a ten percent return on stockholders’ investments in the company
(D) profits in excess of a ten percent return on stockholders’ investments in the company are all distributed in the form of bonuses
(E) bonuses at DSR never drop to zero
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DinoPen
Joined: 02 Jul 2019
Last visit: 09 Jun 2023
Posts: 252
Given Kudos: 200
Location: United States
Concentration: Finance, Strategy
Schools: CBS '25 (A) Booth '25 (II) Fuqua '25 (I) Wharton '25 (II) Kellogg '25 (I) HBS '25 (D) Sloan '25 (WL) Cornell '25 (II) Darden '25 (WL)
GMAT 1: 630 Q48 V28
GMAT 2: 640 Q48 V28
Products:
Schools: CBS '25 (A) Booth '25 (II) Fuqua '25 (I) Wharton '25 (II) Kellogg '25 (I) HBS '25 (D) Sloan '25 (WL) Cornell '25 (II) Darden '25 (WL)
GMAT 2: 640 Q48 V28
Posts: 252
15 Jan 2020, 18:05
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Bunuel
The argument is the following:
If it is a recession, bonuses will be low.
(The converse):
If it is a peak, bonuses will be high.
Bunuel
If you negate this: "The firm will have high profits in recession", you weaken the argument
Bunuel
This does not consider the recessions and booms of the company. Thus, this is irrelevant
Bunuel
This does not provide any insight on when or why profits rarely exceed ten percent of stockholders' investments -- not a required assumption
Bunuel
This provides no insight as to the difference of awarded bonuses in peak or recession
Bunuel
Same as my reasoning for D.
16 Jan 2020, 00:41
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Ans: A
A)the firm will have relatively low profits in recession years.
This explains why bonus is in recession year.
A)the firm will have relatively low profits in recession years.
This explains why bonus is in recession year.
