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Investment banks often have conflicting roles. They sometimes act for 21 Jul 2023, 08:42
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Stanindaw

There doesn't necessarily have to be any falsehood involved. There are many ways to introduce bias, such as selection and emphasis of certain reports over others. All we need to know is that this practice is likely to lead to bias. We don't need that know for sure that bias will occur, and we don't need precise details on the kind of bias. It's enough to know that this creates a strong incentive toward emphasizing positive reports over negative.

As for B, it's not about those missing words. It's simply that there's no reason to believe that using the company's own reports will lead to bias.
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Investment banks often have conflicting roles. They sometimes act for 22 Jul 2023, 05:19
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Hi Experts, KarishmaB, AndrewN

I encountered this question on my Official Mock-3. I boiled it down to A and B but selected B in the end. Yes, I understood that A is more concise and to the point, but I'm not able to eliminate B completely.

Can you please shed your valuable view as to how can we eliminate B?

Thanks in advance. :)
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Investment banks often have conflicting roles. They sometimes act for 23 Jul 2023, 03:37
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ChandlerBong
Hi Experts, KarishmaB, AndrewN

I encountered this question on my Official Mock-3. I boiled it down to A and B but selected B in the end. Yes, I understood that A is more concise and to the point, but I'm not able to eliminate B completely.

Can you please shed your valuable view as to how can we eliminate B?

Thanks in advance. :)
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Hello, ChandlerBong. This is a case in which conciseness works against an answer choice, for (B), by referring to the act of using reports, must be understood to mean any reports from the analysts. The passage tells us that these analysts only sometimes send unfavorable reports, not all the time, so ignoring all reports from the analysts would probably be a bad idea. Using just those that appeared to be unbiased would be in keeping with the recommendation. You might also be caught up on the phrasing of the latter part of the answer choice: how best to raise capital for a client sounds like a judgment is made in favor of one option over another. However, here, the passage and answer choice align nearly word for word:

Quote:
[Investment banks] sometimes act for a client company by raising capital... as advantageously as possible
B. Using reports by the investment bank’s analysts to determine how best to raise capital for a client
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If using reports is not a problem in and of itself, and if the goal fits the "positive" role described in the first half of the second sentence of the passage, before but, then answer choice (B) stops looking so alluring. I will admit that the question is difficult, but it shows that you cannot simply piece together different parts of the passage in an answer choice to fit an interpretation you want to be there. Difficult questions often fit less common molds.

Thank you for thinking to ask, and good luck with your studies.

- Andrew
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Investment banks often have conflicting roles. They sometimes act for 23 Jul 2023, 05:17
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ChandlerBong
Hi Experts, KarishmaB, AndrewN

I encountered this question on my Official Mock-3. I boiled it down to A and B but selected B in the end. Yes, I understood that A is more concise and to the point, but I'm not able to eliminate B completely.

Can you please shed your valuable view as to how can we eliminate B?

Thanks in advance. :)
Hello, ChandlerBong. This is a case in which conciseness works against an answer choice, for (B), by referring to the act of using reports, must be understood to mean any reports from the analysts. The passage tells us that these analysts only sometimes send unfavorable reports, not all the time, so ignoring all reports from the analysts would probably be a bad idea. Using just those that appeared to be unbiased would be in keeping with the recommendation. You might also be caught up on the phrasing of the latter part of the answer choice: how best to raise capital for a client sounds like a judgment is made in favor of one option over another. However, here, the passage and answer choice align nearly word for word:

Quote:
[Investment banks] sometimes act for a client company by raising capital... as advantageously as possible
B. Using reports by the investment bank’s analysts to determine how best to raise capital for a client
If using reports is not a problem in and of itself, and if the goal fits the "positive" role described in the first half of the second sentence of the passage, before but, then answer choice (B) stops looking so alluring. I will admit that the question is difficult, but it shows that you cannot simply piece together different parts of the passage in an answer choice to fit an interpretation you want to be there. Difficult questions often fit less common molds.

Thank you for thinking to ask, and good luck with your studies.

- Andrew
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Ah, didn't think from this perspective, Thank you so much AndrewN for such a crystal clear explanation! :D

It's the details of the options that matters, got it! :)
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Investment banks often have conflicting roles. They sometimes act for 26 Nov 2023, 17:55
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Understanding the argument -
Investment banks often have conflicting roles. Fact/opinion
They sometimes act for a client company by raising capital from other investment institutions as advantageously as possible, but their analysts also sometimes send unfavorable reports on the financial health of companies for whom they are raising capital to other clients who wish to make investments. Fact
Analyses of companies’ financial health need to be unbiased if an investment bank is to achieve long-term success. - Conclusion. Unbiasedness is vital for long-term success.

Option Elimination - We need to find an option if adopted, that would hinder long-term success. So, what will hinder long-term success if they are biased? Yes. So, we need to find an option that leads to a biased view.

(A) Evaluating and rewarding the bank’s analysts on the basis of recommendations made by managers who are solely engaged in raising capital for clients - What's in the interest of managers who are solely engaged in raising capital for clients? Good reports. Bad reports may hurt their efforts to raise capital. So, If the promotion and bonus of the analyst depends on the recommendation of these managers, whom do they reward? The one who aligns with their interest? Right? Yes. So, the analysts may just send good reports. Does that lead to a basis? Yes. The argument shows that bias is not good for long-term success. So this is our answer.

(B) Using reports by the investment bank’s analysts to determine how best to raise capital for a client - This is a good practice. Nothing inherently wrong with this. It only becomes a problem if those reports are biased, but this option doesn't highlight any bias. Wrong.

(C) Sharing the task of raising capital for a client with other investment banks - It's good. No bias is highlighted here.

(D) Ensuring that conflicts between analysts and those who raise capital for clients are carefully mediated and resolved by impartial arbitrators - The very virtue that conflicts happen means they are not biased. Had the analyst been sharing all goody-goody reports, there would not have been any conflicts. Isnt it? Yes. So, this is the opposite of what we need.

(E) Monitoring the success or failure of analysts’ current predictions about how companies will perform financially, in order to determine the value of future predictions - This is good practice so that the analysts can fine-tune their predictions.
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Investment banks often have conflicting roles. They sometimes act for 05 Dec 2024, 01:47
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