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Most large corporations in the United States were once run by individu

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Re: Most large corporations in the United States were once run by individu  [#permalink]

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New post 23 Jul 2019, 20:13
Priyanka2018 wrote:
Hi,

Can someone explain q4?

Thanks in advance.

Quote:
4. The author suggests that which of the following is a true statement about people who typify the “old-style capitalist" referred to in line 23?

(A) They now rely on outdated management techniques.
(B) They seldom engaged in short-term trading of the stock they owned.
(C) They did not influence the investment policies of the corporations in which they invested.
(D) They now play a much smaller role in the stock market as a result of antitrust legislation.
(E) They were primarily concerned with maximizing the short-term profitability of the corporations in which they owned stock.

We are told that "most large corporations in the United States were once run by individual capitalists who owned enough stock to dominate the board of directors and dictate company policy." - This sentence describes capitalists in the past, and these are our "old-style capitalists". We are told that these old-style capitalists "could NOT sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies."

The passage then describes how things work now (in contrast to the days of the old-style capitalists): "Today, with few exceptions, the stock of large United States corporations is held by large institutions... and because these institutions are prohibited by antitrust laws from {...}, they can enhance their wealth only by buying and selling stock in anticipation of fluctuations in its value."

That last part, "buying and selling stock in anticipation of fluctuations in its value", describes "short-term trading" of the stock--stock owners try to anticipate rises and falls in the stock value and buy/sell accordingly. Old-style capitalists could NOT do that... remember, they could NOT sell out for a quick profit (i.e. engage in short-term trading).

Thus, the author suggests that the old-style capitalists seldom engaged in short-term trading of the stock they owned. Because of the word "suggests" in the question, we do not need to find an answer choice that is explicitly stated in the passage or that must be true. (B) is the best answer choice, even though we can't know for sure whether it is entirely accurate.
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Re: Most large corporations in the United States were once run by individu  [#permalink]

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New post 10 Sep 2019, 10:32
Can someone explain Q2 of this passage.
I don't understand how we inferred that B to be the correct ans.
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Re: Most large corporations in the United States were once run by individu   [#permalink] 10 Sep 2019, 10:32

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