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Fund manager: over the last five years, the various stock funds manage

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Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 04 Mar 2017, 09:20
3
8
00:00
A
B
C
D
E

Difficulty:

  85% (hard)

Question Stats:

53% (02:40) correct 47% (02:51) wrong based on 289 sessions

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Fund manager: over the last five years, the various stock funds managed by our company increased on average by 7 percent more in value than the market as a whole annually. Furthermore, the performance of each particular stock fund has not varied much from one year to the next, and our few investment products other than stock funds have stayed even with the market. These results show the success of our company: each year, most of our investment products have increased in value more than the market.

The debater's argument is most vulnerable to criticism on which of these grounds?

A. It takes for granted that the stock funds are typical of the company with regard to the average increase in value per year.

B. It takes for granted that if a certain average annual increase in value was obtained by each investment product, then each stock fund increased each year by approximately the same amount.

C. It confuses a claim from which the argument's conclusion about the company would necessarily follow with a claim that would follow from the argument's conclusion only with a high degree of probability.

D. It overlooks the possibility that even if, on average, the stock funds increased by an average annual value, many stock funds may have increased less than the market as whole.

E. It overlooks the possibility that even if most investment products at the company have increased in value more than the market this year, any one investment product may, in some years, fail to increase in value at all.

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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 04 Mar 2017, 10:00
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sillyboy wrote:
Fund manager: over the last five years, the various stock funds managed by our company increased on average by 7 percent more in value than the market as a whole annually. Furthermore, the performance of each particular stock fund has not varied much from one year to the next, and our few investment products other than stock funds have stayed even with the market. These results show the success of our company: each year, most of our investment products have increased in value more than the market.

The debater's argument is most vulnerable to criticism on which of these grounds?

A. It takes for granted that the stock funds are typical of the company with regard to the average increase in value per year.

B. It takes for granted that if a certain average annual increase in value was obtained by each investment product, then each stock fund increased each year by approximately the same amount.

C. It confuses a claim from which the argument's conclusion about the company would necessarily follow with a claim that would follow from the argument's conclusion only with a high degree of probability.

D. It overlooks the possibility that even if, on average, the stock funds increased by an average annual value, many stock funds may have increased less than the market as whole.

E. It overlooks the possibility that even if most investment products at the company have increased in value more than the market this year, any one investment product may, in some years, fail to increase in value at all.

Source: GmatFree


The argument is: The average value is higher => most of elements in that set is higher in value.

Assume that that set has 5 elements: each of a1, a2, a3, a4 is 1 lower in value. However, a5 is 10 higher in value. In total that set is 6 higher in value, but most of elements in that set is lower in value. This means that the argument is wrong.

We come to choice E, as the correct answer.
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New post 06 Mar 2017, 04:51
the answer should be D as it is possible that the major part of the investment is other than the stock fund so even if increase in the value of stock fund it does not reflect company's success with regard to increase in the value of just stock fund .
although i have a doubt regarding A , can someone explain the better reason to eliminate A
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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 07 Mar 2017, 05:54
A very wordy question and a tough one to understand. Can anyone please explain the question and give the OA/OE.
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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 07 Mar 2017, 08:04
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OE:

Explanation

Reading the question: the fund manager's argument has many error-prone features. It draws conclusions from a group of things, it deals in percentages, and it makes comparisons. We will use term matching to hunt for an error, starting with the conclusion.


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Creating a filter: each half of the conclusion is connected in multiple dubious ways to the evidence. The right answer will probably involve a bad bridge from the evidence to one or to the other. For example, the evidence is saying stock funds have beat the market "on average." But that is not the same as saying that "most of our investment products" have beat the market. Most could, in fact, be failures, with one anomalous market saving the average. The second sentence doesn't help this problem. So we'll paraphrase this error as "average <> most" and use that as our filter.

Applying the filter: (D) matches our filter precisely. Choice (A) is not really an error, given the second sentence of the prompt. (B), similarly, describes something the argument doesn't do. (C) is similar to (D)--but who knows what the probability really is? It's not necessarily high. (E) is similar to (D)--but pointing out that "any one" product might have done poorly doesn't actually undermine the argument much, because it still allows for "most of our investment products" to beat the market. The correct answer is (D).
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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 20 Jun 2017, 00:07
"over last 5 years" and "each year" is the key, then A,C,E are out => B,D are left.
B talks about the same amount of each year. this does not weaken the argument at all. On the other hand, D weakens the idea of the conclusion that "most of stocks increased values each year"
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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 05 Jun 2019, 10:08
I solved this one based on the classic blunder of "wrongly generalized average".

However, I have to admit that I had quite some difficulties to actually understand some of the answer choices.
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Re: Fund manager: over the last five years, the various stock funds manage  [#permalink]

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New post 05 Jun 2019, 14:36
I fail to understand what choice c intend to say .it's too complex

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Re: Fund manager: over the last five years, the various stock funds manage   [#permalink] 05 Jun 2019, 14:36
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