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Community spokesperson: After a recent surge of

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Re: Community spokesperson: After a recent surge of foreclosures [#permalink]

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New post 30 May 2013, 18:07
Rock750 wrote:
Community spokesperson: After a recent surge of foreclosures, many homes in our community are vacant and falling into disrepair. Property values are already falling, and, if action is not taken quickly, will fall even further when panicked residents begin to leave. Clearly the only way to prevent a snowball effect is to make it easy to purchase these vacant homes by offering potential buyers special mortgages with a low interest rate for the first two years.

Which of the following, if true, represents the most significant potential problem with the plan to attract buyers through special mortgage offers?

A- Interest rates in the area are already at a 5-year low, and it would be foolish of lenders to lower them even more.
B- rime rates in the area have risen by 1% in the last year, making it less likely that potential buyers will be interested in moving to the area.
C- Most residents have lived in the area for over 20 years and do not want to leave their homes.
D- Low interests rates will likely attract buyers who will be unable to make payments when the interest rate goes up after the first two years.
E- There are few mortgage brokers in the area, making it unlikely that there will be enough personnel to assist a rush of potential home buyers.

OA :
[Reveal] Spoiler:
D


The plan to attract potential buyers by offering low-interest rate mortgages for the first two years rests on which of the following assumptions?

A- Vacant homes will always fall into disrepair.
B- Homes in the area remain vacant mostly because it is too difficult for potential buyers to get mortgages.
C- Lenders have enough confidence in their knowledge of interest rates that they can predict what will be considered a low rate for the next two years.
D- Some home owners may stay in the community, but their property values will decrease.
E- Vacant homes will cause residents to panic.

OA:
[Reveal] Spoiler:
B


The problem is people are leaving. If you try to attract people by lowering rates for two years than you might get people who can't pay the mortage after the rates go high and hence have to leave. purpose defeated. D Wins.

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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 13 Jul 2014, 09:27
Rock750 wrote:
Community spokesperson: After a recent surge of foreclosures, many homes in our community are vacant and falling into disrepair. Property values are already falling, and, if action is not taken quickly, will fall even further when panicked residents begin to leave. Clearly the only way to prevent a snowball effect is to make it easy to purchase these vacant homes by offering potential buyers special mortgages with a low interest rate for the first two years.

Which of the following, if true, represents the most significant potential problem with the plan to attract buyers through special mortgage offers?

A- Interest rates in the area are already at a 5-year low, and it would be foolish of lenders to lower them even more.
B- rime rates in the area have risen by 1% in the last year, making it less likely that potential buyers will be interested in moving to the area.
C- Most residents have lived in the area for over 20 years and do not want to leave their homes.
D- Low interests rates will likely attract buyers who will be unable to make payments when the interest rate goes up after the first two years.
E- There are few mortgage brokers in the area, making it unlikely that there will be enough personnel to assist a rush of potential home buyers.

OA :
[Reveal] Spoiler:
D


The plan to attract potential buyers by offering low-interest rate mortgages for the first two years rests on which of the following assumptions?

A- Vacant homes will always fall into disrepair.
B- Homes in the area remain vacant mostly because it is too difficult for potential buyers to get mortgages.
C- Lenders have enough confidence in their knowledge of interest rates that they can predict what will be considered a low rate for the next two years.
D- Some home owners may stay in the community, but their property values will decrease.
E- Vacant homes will cause residents to panic.

OA:
[Reveal] Spoiler:
B


I want to discuss on the second question, for which B is the answer.
I understand that "B" sounds an immediate assumption but I am unable to completely reject option "C". I still do feel that C is somewhat an assumption and hence can be correct. Please tell me where am I falling for the trap :shock: :?
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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 13 Jul 2014, 11:54
@mshrek : for the second question, option C may be an assumption, but that is absolutely irrelevant to the context of the question. Whether lenders know what is low or not is not important in this context.. the interest rate may be zero and there may still not be any buyers..

the important assumption is.. lower interest will attract potential buyers. i.e potential buyers have stayed away because interest rates are high.

B is right.

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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 09 Nov 2014, 00:28
The Answers to this question does not seem to be framed right. THough the answer is given as B, there is good reason to reject B.

B says "Homes in the area remain vacant mostly because it is too difficult for potential buyers to get mortgages."

The passage mentions only about giving special Mortgages (interest free mortgages) . So it is reasonable to think that vacant houses are due to lack of these 'low interest mortgages". But we Cannot say that people find it very difficult to even find ordinary mortage facility. The passage has no indication of normal mortgage facilities. May be there are many mortgages available, but only low interest mortgages are unavailable.. So B is not a good answer.

B wud have been correct if it said "Homes in the area remain vacant mostly because it is too difficult for potential buyers to get low interest mortgages."


On the other Hand consider C:
If people dont know what is low rate, then why wud people buy the houses offered on low interest mortgage.
If you Offer low interest rates to the people who dont know what is meant by 'low rate' , it absolutely does not make sense. If people dont know what is 'low rate', them why will people be attracted to that idea.?

Option C is much better an answer for this passage.

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Re: Community spokesperson : After a recent surge of [#permalink]

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New post 26 Mar 2015, 02:34
Am I the only one who chose answer B? If people are afraid of crime rates and will not buy homes for that reason then it doesn't matter whether mortgages are with low interest rates or not. People won't buy them in any case, so the plan won't work.

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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 18 Dec 2017, 20:23
Merged topics. Please, search before posting questions!
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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 19 Dec 2017, 08:52
OA cannot be D here.
The plan in the argument is make easy to purchase those vacant homes.
Question ask us to find a problem in plan. It means a reason to fail the plan.
But D tells that plan will success. Peoples are likely to buy homes and why to care whether they pay after 2 years or not. Plan to fill vacant homes is successful.

Am i right? Please explain if i am wrong.
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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 19 Dec 2017, 09:08
The wording is confusing, but if we read carefully - it is not the case that the question is about the short-term effects.
The goal of the plan, as stated in the first sentence, is to solve the problem of vacant homes in the community.
The reason many people get confused is because the question asks about "the most significant potential problem with the plan to attract buyers through special mortgage offers?", and they interpret this as meaning that this is the ultimate goal of the plan. It isn't. This merely describes what the plan is, NOT what it's goal is.
Hence, E is wrong. (D) is the answer.
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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 19 Dec 2017, 09:11
imyuva wrote:
OA cannot be D here.
The plan in the argument is make easy to purchase those vacant homes.
Question ask us to find a problem in plan. It means a reason to fail the plan.
But D tells that plan will success. Peoples are likely to buy homes and why to care whether they pay after 2 years or not. Plan to fill vacant homes is successful.

Am i right? Please explain if i am wrong.


imyuva you are wrong, and the reason is confusion between what the plan is, and what it's goal is.

The goal of the plan, as stated in the first sentence, is to solve the problem of vacant homes in the community.

The reason many people get confused is because the question asks about "the most significant potential problem with the plan to attract buyers through special mortgage offers?", and they interpret this as meaning that this is the ultimate goal of the plan. It isn't. This merely describes what the plan is, NOT what its goal is. It goal is to solve the vacant home problem, and its tool is attracting buyers.
Hence, (E) is wrong. (D) is the answer.
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Re: Community spokesperson: After a recent surge of [#permalink]

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New post 10 Jan 2018, 23:27
D
Reason: stem asking issue with plan: after 2 year high interest rate will be issue since in stimulus it is clearly mentioned it is for 2 years only
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Re: Community spokesperson: After a recent surge of   [#permalink] 10 Jan 2018, 23:27

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