It is currently 17 Nov 2017, 16:22

Close

GMAT Club Daily Prep

Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track
Your Progress

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.

Close

Request Expert Reply

Confirm Cancel

Events & Promotions

Events & Promotions in June
Open Detailed Calendar

Corporate officers and directors commonly buy and sell, for

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  
Author Message
TAGS:

Hide Tags

Manager
Manager
avatar
Joined: 14 Dec 2004
Posts: 116

Kudos [?]: 70 [0], given: 0

Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 05 Apr 2005, 19:23
1
This post was
BOOKMARKED
00:00
A
B
C
D
E

Difficulty:

  35% (medium)

Question Stats:

73% (00:51) correct 27% (01:05) wrong based on 49 sessions

HideShow timer Statistics

Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
(B) Inside purchases of MEGA stock are about to cease abruptly.
(C) The price of MEGA stock will soon begin to go up.
(D) The price of MEGA stock will continue to drop, but less rapidly.
(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.
[Reveal] Spoiler: OA

Last edited by Skywalker18 on 12 Nov 2017, 19:49, edited 1 time in total.
OA Added

Kudos [?]: 70 [0], given: 0

GMAT Club Legend
GMAT Club Legend
User avatar
Joined: 07 Jul 2004
Posts: 5032

Kudos [?]: 452 [0], given: 0

Location: Singapore
Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 05 Apr 2005, 19:29
Premise:
sales: purchase below 2:1 --> rise in stock price imminent
Claim:
sales:purchase = 1:9 --> stock price falling

The facts above best support which of the following predictions?
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
- Can't tell this from the premise given

(B) Inside purchases of MEGA stock are about to cease abruptly.
- We also won't know if it will be abrut

(C) The price of MEGA stock will soon begin to go up.
- We know if the ratio falls below 2:1, the price should rise. So this should be the answer.

(D) The price of MEGA stock will continue to drop, but less rapidly.
- Again, we can't tell based on the premise given

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.
- We won't know if this will actually happen

C it is.

Kudos [?]: 452 [0], given: 0

Manager
Manager
avatar
Joined: 14 Dec 2004
Posts: 116

Kudos [?]: 70 [0], given: 0

Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 05 Apr 2005, 19:34
Thanks for the explanation. OA is C.

Kudos [?]: 70 [0], given: 0

VP
VP
avatar
Joined: 26 Apr 2004
Posts: 1205

Kudos [?]: 843 [0], given: 0

Location: Taiwan
Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 05 Apr 2005, 20:34
cloaked_vessel wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
(B) Inside purchases of MEGA stock are about to cease abruptly.
(C) The price of MEGA stock will soon begin to go up.
(D) The price of MEGA stock will continue to drop, but less rapidly.
(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.


C it is.

if sales/purchase < 2 ---> stock prices rise

now purchase = 9 sales, i.e. sales / purchase =1/9
so, stock prices will go up.

Kudos [?]: 843 [0], given: 0

Current Student
User avatar
Joined: 03 Feb 2013
Posts: 941

Kudos [?]: 1075 [0], given: 548

Location: India
Concentration: Operations, Strategy
GMAT 1: 760 Q49 V44
GPA: 3.88
WE: Engineering (Computer Software)
Reviews Badge
Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 10 Feb 2014, 08:36
cloaked_vessel wrote:
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation’s officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
(B) Inside purchases of MEGA stock are about to cease abruptly.
(C) The price of MEGA stock will soon begin to go up.
(D) The price of MEGA stock will continue to drop, but less rapidly.
(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.


Please update the OA in the first post.

The OE is:

Since MEGA’s officers and directors have bought almost nine times as much of MEGA’s stock as they have sold, the ratio of inside sales to inside purchases is roughly 1 to 9, well below 2 to 1. Hence, by the generalization stated in the passage, as rise in MEGA’s stock price is imminent and choice C is the best answer.

Since the prediction in choice D runs counter to the stated generalization, choice D is not supported. The passage does not suggest there will be an increase in the imbalance between such purchases and sales. Thus, choice A is not supported. Similarly, the passage suggests neither that inside purchases are about to cease nor that the majority of MEGA stocks will soon be owned by MEGA officers and directors. Thus, neither choice B nor choice E is supported.
_________________

Thanks,
Kinjal
My Debrief : http://gmatclub.com/forum/hardwork-never-gets-unrewarded-for-ever-189267.html#p1449379
My Application Experience : http://gmatclub.com/forum/hardwork-never-gets-unrewarded-for-ever-189267-40.html#p1516961
Linkedin : https://www.linkedin.com/in/kinjal-das/

Please click on Kudos, if you think the post is helpful

Kudos [?]: 1075 [0], given: 548

Non-Human User
User avatar
Joined: 01 Oct 2013
Posts: 10145

Kudos [?]: 270 [0], given: 0

Premium Member
Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 29 Jun 2016, 13:25
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.

Kudos [?]: 270 [0], given: 0

Senior Manager
Senior Manager
avatar
G
Joined: 26 Dec 2015
Posts: 256

Kudos [?]: 55 [0], given: 1

Location: United States (CA)
Concentration: Finance, Strategy
WE: Investment Banking (Venture Capital)
Re: Corporate officers and directors commonly buy and sell, for [#permalink]

Show Tags

New post 14 Sep 2017, 19:42
Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations. Generally, when the ratio of such inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. In recent days, while the price of MEGA Corporation stock has been falling, the corporation's officers and directors have bought up to nine times as much of it as they have sold.

The facts above best support which of the following predictions?

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
- we don't know that there was an inbalance in the first place...and have no way to verify this.

(B) Inside purchases of MEGA stock are about to cease abruptly.
- "abruptly" = extreme language. we don't know this for sure.

(C) The price of MEGA stock will soon begin to go up.
- correct as is. if your ratio is sales/purchase and decreasing this # will increase the stock price -- the stock price is going to decrease. this is b/c the passage says the corp's officers are buying 9x the # they've sold. huuge imbalance. the # is going down.

(D) The price of MEGA stock will continue to drop, but less rapidly.
- OPPOSITE. see "C" for clarification

(E) The majority of MEGA stock will soon be owned by MEGA's own officers and directors.
- we don't know this. maybe there was an overwhelming majority going the other way and after this, it would be 50/50?

I treated this Q like an Inference. Just looked for the statement I thought must be true here.

Kudos please if you find this helpful :)

Kudos [?]: 55 [0], given: 1

Re: Corporate officers and directors commonly buy and sell, for   [#permalink] 14 Sep 2017, 19:42
Display posts from previous: Sort by

Corporate officers and directors commonly buy and sell, for

  new topic post reply Question banks Downloads My Bookmarks Reviews Important topics  


GMAT Club MBA Forum Home| About| Terms and Conditions| GMAT Club Rules| Contact| Sitemap

Powered by phpBB © phpBB Group | Emoji artwork provided by EmojiOne

Kindly note that the GMAT® test is a registered trademark of the Graduate Management Admission Council®, and this site has neither been reviewed nor endorsed by GMAC®.