Corporate officers and directors commonly buy and sell, for their own

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.

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.

Inside trading (sell and purchase) will bring the ratio between 2 to 1 hence the stock rate to improve/grow;nine times purchase will enhance the price of stocks

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.
No,it is mentioned that the sell -purchase will rise the stock prices-incorrect
(B) Inside purchases of MEGA stock are about to cease abruptly.
its is not mentioned anywhere-incorrect
(C) The price of MEGA stock will soon begin to go up.correct
(D) The price of MEGA stock will continue to drop, but less rapidly.incorrect
(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.
out of scope, no where mentioned that the officers/directors will own the majority of shares-incorrect

The stimulus says that when the ratio of inside sales to inside purchases falls below 2:1, a rise in stock prices is imminent, i.e. sure to happen in the near future.

A): We cannot conclude this as we are not given any relationship between how the inside sales and purchases of MEGA stock will move in the future
B): We cannot conclude this as no information is given to this effect
C): Correct. This follows from the stimulus through only slight inference.
D): We know that the stock price has been dropping but do not know how it will continue to move in the future.
E): We are given no information on this.

C it is.

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.

Stock goes up when sales/purchase < 2.

Sales/Purchase = 1/9

Henceforth , Stocks will see increasing trend in future.

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

Hi Bunuel,

Would this question fall under "Inference" category.

Probus

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.

Inside trading (sell and purchase) will bring the ratio between 2 to 1 hence the stock rate to improve/grow;nine times purchase will enhance the price of stocks

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.
No,it is mentioned that the sell -purchase will rise the stock prices-incorrect
(B) Inside purchases of MEGA stock are about to cease abruptly.
its is not mentioned anywhere-incorrect
(C) The price of MEGA stock will soon begin to go up.correct
(D) The price of MEGA stock will continue to drop, but less rapidly.incorrect
(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors.
out of scope, no where mentioned that the officers/directors will own the majority of shares-incorrect
_________________

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
Kindly elaborate all the answer choices.Which one is right or wrong please give reason for the same

(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
They are in balance now, so we don't know if there will be some imbalance for sure.

(B) Inside purchases of MEGA stock are about to cease abruptly. (extreme)

(C) The price of MEGA stock will soon begin to go up. (CORRECT)
Since they are buying and selling by the same ratio, and generally when they sell, the price goes up, this is most probably to happen.

(D) The price of MEGA stock will continue to drop, but less rapidly. (we don't know by what extend)

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors
It depends on the volume of the stock, we don't know how many stocks are to determine that a majority of them will own it.

Between the options, C is the winner but its a very poor candidate I feel. Here are my reasons.

Generally, when the ratio bla bla, rise in stock prices is imminent. (Generally does not mean surety).

But anyways, GMAT is about 4 incorrect choices and the rest 4 are very bad.

helped a lot, show you love umg4147

Inference:
1 < ratio of (inside sales of stocks)/(inside purchase of stocks) < 2 when this happens , rise in stock prices.
Now in MEGA :

Purchase = 9* sale of stocks , so the ration Sales/(9*Sales) = 1/9 which clearly falls between 2 to 1 ,
so definitely stocks price of MEGA will increase.

Now choices:
(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
-- we cannot infer this because we know only the ration but the exact values of stocks sold and purchased is unknown.

(B) Inside purchases of MEGA stock are about to cease abruptly.
-- we cannot infer this as this is out of context , ceasing is not discussed here.

(C) The price of MEGA stock will soon begin to go up.
-- this is correct as we inferred.

(D) The price of MEGA stock will continue to drop, but less rapidly.
-- this is exactly opposite of what we inferred so not correct.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors
-- this we cannot infer as we don't know the exact stock values and exactly who brought it.

Ans C

Corporate officers and directors commonly buy and sell, for their own portfolios, stock in their own corporations.

It is common for corporate workers and directors to buy and sell stock in their own companies.

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.

• Inside sales and inside purchases: sale and purchase of stocks by officers and directors of the company (let’s just call them company employees)
• ‘Ratio of inside sales to inside purchases’: Ratio of number of stocks sold by company employees to number of stocks purchased by company employees
• When this ratio falls below 2 to 1: So, when the number of shares sold becomes less than twice the number of shares bought - e.g. 100 shares sold and 60 shares bought.

This statement is talking about a general trend. When the ratio of inside sales to inside purchases goes below a certain level, the stock’s price increases.

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.

This statement talks about a particular company.

MEGA’s stock price has been falling.

The ratio of inside sales to inside purchases: 1 to 9 (1:9).

A few things to note:

1. The employees have bought up to 9 times as many shares as they have sold.

a. Shares bought > shares sold
b. Shares bought = 9 x shares sold
c. So, if the number of shares sold is 100, the number shares bought would be up to 100 x 9 (= 900).
2. The ‘below 2 to 1’ ratio mentioned above is of sales to purchases (bought 100, sold 60)
3. In terms of a ratio of sales to purchases this 9x figure talked about in this statement would be 1:9. The ratio would not be 9:1.
4. 1:9 is significantly less than 2:1

a. 1:9 :: 1/9 = 0.11
b. 2:1 :: 2/1 = 2
c. 2 is almost 20 times of 0.11
d. So, 2:1 almost 20x of 1:10
e. 1:9 is significantly less than 2:1

The facts above best support which of the following predictions?

An ideal answer choice would be an inference based on the passage.

One prediction that comes to mind is: Since the ratio of inside sales to inside purchases in the company is less than 2:1 (1:9 is less than 2:1), the company’s stock price will increase.



(A) The imbalance between inside purchases and inside sales of MEGA stock will grow even further.
Incorrect.
i.e. the ratio (currently 1:9) will continue to dip. I don’t get any such indication from the passage. In fact, since the current ratio could lead to an increase in stock price, perhaps inside sales increase and inside purchases reduce. So, I’d imagine that the imbalance will actually reduce. Though I couldn’t infer that either.

(B) Inside purchases of MEGA stock are about to cease abruptly.
Incorrect.
Since the current inside sales to inside purchases ratio would lead to an increase in stock price, maybe inside purchases would reduce. However, there is nothing in the passage to support that inside purchases will cease abruptly, and that too in the near future.

(C) The price of MEGA stock will soon begin to go up.
Correct.
We’re given that:

1. When the ratio of inside sales to inside purchases goes below 2 to 1, a rise in stock prices is imminent
2. We’re given that the ratio of inside sales to inside purchases at MEGA is 1 to 9.

1 to 9 is significantly lower than 2 to 1.

So, a rise in MEGA’s stock price is imminent (about to happen).

(D) The price of MEGA stock will continue to drop, but less rapidly.
Incorrect.
We can, in fact, predict that this will not happen. As discussed in the previous answer choice, the price of MEGA stock will soon rise. So, the prediction that the price of the stock will continue to drop is contrary and not supported by the passage.

(E) The majority of MEGA stock will soon be owned by MEGA’s own officers and directors
Incorrect.
All we have is the current ratio of sales to purchases by MEGA employees.

1. We don’t know the number of shares bought and sold by them
2. Even if we were given those numbers - say 100 sold and 900 bought. We don’t know how many shares the company has in total. i.e., these 1000 shares make up what proportion of the company’s total shares.

The passage states that when the ratio of inside sales to inside purchases falls below 2 to 1 for a given stock, a rise in stock prices is imminent. It also mentions that, despite the falling price of MEGA Corporation stock, the officers and directors have bought up to nine times as much as they have sold. We need to identify the prediction that is best supported by these facts.

Option (A) predicts that the imbalance between inside purchases and inside sales of MEGA stock will grow even further. There is no direct evidence to support or refute this prediction based on the information provided.

Option (B) predicts that inside purchases of MEGA stock are about to cease abruptly. This prediction is not supported by the information provided, as it states that the officers and directors have bought a significant amount of MEGA stock despite the falling prices.

Option (C), the correct answer, predicts that the price of MEGA stock will soon begin to go up. This prediction aligns with the information given, which suggests that a rise in stock prices is imminent when the ratio of inside sales to inside purchases falls below 2 to 1.

Option (D) predicts that the price of MEGA stock will continue to drop, but less rapidly. This prediction contradicts the information provided, which suggests that a rise in stock prices is imminent when the inside sales-to-purchases ratio is low.

Option (E) predicts that the majority of MEGA stock will soon be owned by MEGA's officers and directors. This prediction goes beyond the information provided and cannot be directly inferred from the facts given.

In conclusion, option (C) is the prediction best supported by the facts presented, as it aligns with the information that a rise in the price of MEGA stock is expected when the inside sales-to-purchases ratio is low.