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Community spokesperson: After a recent surge of

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

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New post 29 Oct 2011, 22:12
3
6
00:00
A
B
C
D
E

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  35% (medium)

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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) Crime 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.

Please help with the solution
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Re: Community spokesperson [#permalink]

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New post 29 Oct 2011, 22:49
If E is true, then the plan will not work. I pick E.

OA?
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Re: Community spokesperson [#permalink]

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New post 29 Oct 2011, 23:25
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DexDee wrote:
If E is true, then the plan will not work. I pick E.

OA?


I will post the OA after few more discussions. But the OA is not E.
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Re: Community spokesperson [#permalink]

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New post 30 Oct 2011, 09:36
IMO D
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Re: Community spokesperson [#permalink]

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New post Updated on: 01 Nov 2011, 10:15
Initially I thought E.

If E is not the OA then it could be D
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Originally posted by g106 on 30 Oct 2011, 10:58.
Last edited by g106 on 01 Nov 2011, 10:15, edited 1 time in total.
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Re: Community spokesperson [#permalink]

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New post 30 Oct 2011, 20:26
Folks please try to explain your answers (like reason for selection and rejection of certain option) as this is a discussion forum.
BTW the OA is D
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Re: Community spokesperson [#permalink]

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New post 31 Oct 2011, 15:14
IMO-D.
As per the plan the buyers would be given special mortgages with a low interest rate for the first two years.Hence the scheme could fail if the buyers are unable to pay after interest rates are increased after 2 yrs.
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Re: Community spokesperson [#permalink]

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New post 01 Nov 2011, 00:12
+1 for D.

The only other contender was C, but most does not mean all. Hence D wins.

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Re: Community spokesperson [#permalink]

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New post 01 Nov 2011, 12:13
I don't think it's D. The plan is to attract potential buyers. Who cares if they can't pay anymore after 2 years? The question doesnt ask or state anything about long-term effects. They'd be able to sell those houses today and thats all that matters for the question.

For the lack of other reasonable choices I'd choose E. I don't really like it because in my opinion, they could still sell the houses and it'd just take a little longer if the brokers are busy, but again i think that's the most reasonable one.
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Re: Community spokesperson [#permalink]

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New post 06 Nov 2011, 18:57
I totalt agree! The main question is are we looking for a long term benefit or a short one? I believe a short one is asked for. E is a really bad choice but it's better since it gives explanations to the specific question? Anybody know how to distinguise between reason and specific wording in the question?

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

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New post 08 Nov 2011, 06:35
According to the question "Which of the following, if true, represents the most significant potential problem with the plan to attract buyers through special mortgage offers?". E is better choice than D
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Re: Community spokesperson : After a recent surge of [#permalink]

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New post 08 Nov 2011, 07:47
Sudhanshuacharya 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) Crime 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.

Please help with the solution


The scope of this CR question is the potential problem of the special mortgage offer. During my first read, I can eliminate choices A, B, and C.

Only D and E left, and I took D. I think not having enough personnel may not be the potential problem of the plan. Choice D, on the other hand, can result in raising the default rate when the number of buyers who won't be able to repay increases. So, that can be considered the potential issue of the plan.
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Re: Community spokesperson : After a recent surge of [#permalink]

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New post 09 Nov 2011, 16:11
The problem is the wording of the question! There is no potential problem with attracting the buyers with low interests rates, they will be attracted! The problems come later but are not associated with selling houses!

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

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New post 13 Nov 2011, 14:49
I go for D because:

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.
foolish is not a word we can rely on because it might not foolish as it has positive effect since it would increase the purchases.
B) Crime 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.
we can't trust percents in CR, we dont know how big the number is with 1% or how low. it is not representative.
C) Most residents have lived in the area for over 20 years and do not want to leave their homes.
this is irrelevant and there is an assurance word that we can't trust "DO NOT WANT".
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.
this answer serves best as it indicates a direct problem with the plan or conclusion that people would not be able to make payments.
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.
totally irrelevant and out of scope

hope that helps :) good luck
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Community spokesperson: After a recent surge of [#permalink]

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New post 30 May 2013, 18:25
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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 :

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

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New post 30 May 2013, 19:07
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 :

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:


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, 10:27
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 :

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:


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, 12:54
@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, 01:28
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, 03:34
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.
Re: Community spokesperson : After a recent surge of   [#permalink] 26 Mar 2015, 03:34

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