GMAT Question of the Day - Daily to your Mailbox; hard ones only

It is currently 25 Mar 2019, 21:17

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

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

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

Hide Tags

 
Senior Manager
Senior Manager
avatar
Joined: 05 Nov 2012
Posts: 436
Concentration: Technology, Other
GMAT ToolKit User Premium Member Reviews Badge
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 01 Sep 2016, 22:12
Top Contributor
9:30 mins all correct. Edited para to add markers from the questions.
Senior Manager
Senior Manager
User avatar
G
Status: Active
Affiliations: NA
Joined: 24 Oct 2012
Posts: 263
GMAT 1: 590 Q50 V21
GMAT 2: 600 Q48 V25
GMAT 3: 730 Q51 V37
GPA: 3.5
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 13 Feb 2017, 03:26
Amazing all are correct :)
_________________
#If you like my post , please encourage me by giving Kudos :)
Veritas Prep GMAT Instructor
User avatar
D
Joined: 16 Oct 2010
Posts: 9015
Location: Pune, India
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 01 Dec 2017, 03:20
Bhartiindia wrote:
The Official Guide for GMAT Review 10th Edition, 2003

Practice Question
Question No.: RC 88 ~ 94
Page: 348

[box_out][box_in]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. Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies. Today, with few exceptions, the stock of large United States corporations is held by large institutions — pension funds, for example — and because these institutions are prohibited by antitrust laws from owning a majority of a company's stock and from actively influencing a company's decision-making, they can enhance their wealth only by buying and selling stock in anticipation of fluctuations in its value. A minority shareholder is necessarily a short term trader. As a result, United States productivity is unlikely to improve unless shareholders and the managers of the companies in which they invest are encouraged to enhance long-term productivity (and hence long-term profitability), rather than simply to maximize short term profits.

Since the return of the old-style capitalist is unlikely, today's short-term traders must be remade into tomorrow's long-term capitalistic investors. The legal limits that now prevent financial institutions from acquiring a dominant shareholding position in a corporation should be removed, and such institutions encouraged to take a more active role in the operations of the companies in which they invest. In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares. Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet and, like the old-time capitalists, major investors could cut their losses only by helping to restore their companies' productivity. Such measures would force financial institutions to become capitalists whose success depends not on trading shares at the propitious moment, but on increasing the productivity of the companies in which they invest.

Responding to a pm:
Quote:
1. It can be inferred that the author makes which of the following assumptions about the businesses once controlled by individual capitalists?

(A) These businesses were less profitable than are businesses today.
(B) Improving long-term productivity led to increased profits.
(C) Each business had only a few stockholders.
(D) There was no short-term trading in the stock of these businesses.
(E) Institutions owned no stock in these companies.


The passage tells us that "Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies".
So the capitalists could not make profits by selling the stock on the market and hence had to focus on productivity. This implies that higher productivity led to increased profits and that is how the capitalists made profit. Hence (B) is true.

Quote:
2. The passage supports which of the following statements?
(A) Antitrust laws prevent any single shareholder from acquiring a majority of the stock in a corporation.
(B) Institutions that intend to sell a large block of stock in a single corporation must give at least twenty-four hours notice of the sale.
(C) In most corporations it is the board of directors rather than the corporate managers who make policy decisions.
(D) The sudden sale of a large amount of stock in any one corporation makes the value of the stock go down.
(E) The way corporations are currently run, it is unlikely that increased productivity would lead to short-term increases in stock values.


There are multiple references to (D):
Because putting such large amounts of stock on the market would only depress its value,
Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet

Hence the passage supports (D)
_________________
Karishma
Veritas Prep GMAT Instructor

Learn more about how Veritas Prep can help you achieve a great GMAT score by checking out their GMAT Prep Options >
Manager
Manager
avatar
B
Joined: 05 Jan 2014
Posts: 70
Location: India
GMAT 1: 610 Q47 V26
GPA: 3.76
WE: Information Technology (Computer Software)
GMAT ToolKit User Reviews Badge
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 01 Dec 2018, 21:32
Hi VeritasKarishma

Quote:
You've mentioned that:

There are multiple references to (D):
Because putting such large amounts of stock on the market would only depress its value,
Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet

Hence the passage supports (D)


The correct answer choice uses the present tense while in passage, 'would' is used (kind of prediction).

Can you please give your inputs whether if such deviation is allowed?

Thanks a lot.
VP
VP
User avatar
D
Joined: 09 Mar 2016
Posts: 1280
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 02 Dec 2018, 05:25
Where does it say in the passage that they seldom engaged in short term trading ?

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.
SC Moderator
User avatar
V
Joined: 23 Sep 2015
Posts: 1724
GMAT ToolKit User Premium Member Reviews Badge CAT Tests
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 04 Dec 2018, 16:56
P1 - situation old and new times, + productivity
P2 - laws around to improve today's situation.

1. In the passage, the author is primarily concerned with doing which of the following?

(B) Describing a problem and proposing a solution

-------------------------------------------------

2. It can be inferred from the passage that which of the following is true of majority shareholders in a corporation?

In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares.

(C) They cannot make quick profits by selling their stock in the corporation.

--------------------------------------------------

3. According to the passage, the purpose of the requirement suggested in lines 30-33 [In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares.] would be which of the following?

Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet and, like the old-time capitalists, major investors could cut their losses only by helping to restore their companies' productivity.

(C) To discourage short-term profit-taking by institutional stockholders

---------------------------------------------------

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?
P2 is all on these lines.
(B) They seldom engaged in short-term trading of the stock they owned.

----------------------------------------------------

5. It can be inferred that the author makes which of the following assumptions about the businesses once controlled by individual capitalists?

Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies

(B) Improving long-term productivity led to increased profits.

--------------------------------------------------

6. The author suggests that the role of large institutions as stockholders differs from that of the “old-style capitalist” in part because large institutions

P2 is around this.
(B) are prohibited by law from owning a majority of a corporation’s stock
-----------------------------------------------------

7. The primary function of the second paragraph of the passage is to

(E) recommend actions

------------------------------------------------------

8. The passage supports which of the following statements?

(D) The sudden sale of a large amount of stock in any one corporation makes the value of the stock go down.
_________________
Thanks!
Do give some kudos.

Simple strategy:
“Once you’ve eliminated the impossible, whatever remains, however improbable, must be the truth.”

Want to improve your Score:
GMAT Ninja YouTube! Series 1| GMAT Ninja YouTube! Series 2 | How to Improve GMAT Quant from Q49 to a Perfect Q51 | Time management

My Notes:
Reading comprehension | Critical Reasoning | Absolute Phrases | Subjunctive Mood
Manager
Manager
avatar
B
Joined: 01 Nov 2018
Posts: 73
GMAT 1: 690 Q48 V35
GPA: 3.88
Reviews Badge CAT Tests
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 03 Jan 2019, 16:48
Could someone please explain Question 2/8 and also 8/8? I chose D initially for the last question and changed my answer to A. For me, the biggest turnoff from choice D was the word "single". I was trying to nitpick between A and D and assumed individual shareholder referred to one of the large institutions mentioned. Either way, I wish the wording on the answer choices for those 2 options showed a greater contrast as I knew what I was looking for by was stumped between nearly 2 identical choices. For question 2, I could not find the pertinent information from the passage to support an answer.
Intern
Intern
avatar
B
Joined: 09 Oct 2018
Posts: 4
Re: Most large corporations in the United States were once run by individu  [#permalink]

Show Tags

New post 10 Jan 2019, 06:48
Bhartiindia wrote:
The Official Guide for GMAT Review 10th Edition, 2003

Practice Question
Question No.: RC 88 ~ 94
Page: 348

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. Because putting such large amounts of stock on the market would only depress its value, they could not sell out for a quick profit and instead had to concentrate on improving the long-term productivity of their companies. Today, with few exceptions, the stock of large United States corporations is held by large institutions — pension funds, for example — and because these institutions are prohibited by antitrust laws from owning a majority of a company's stock and from actively influencing a company's decision-making, they can enhance their wealth only by buying and selling stock in anticipation of fluctuations in its value. A minority shareholder is necessarily a short term trader. As a result, United States productivity is unlikely to improve unless shareholders and the managers of the companies in which they invest are encouraged to enhance long-term productivity (and hence long-term profitability), rather than simply to maximize short term profits.

Since the return of the old-style capitalist is unlikely, today's short-term traders must be remade into tomorrow's long-term capitalistic investors. The legal limits that now prevent financial institutions from acquiring a dominant shareholding position in a corporation should be removed, and such institutions encouraged to take a more active role in the operations of the companies in which they invest. In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares. Unless the announced sale could be explained to the public on grounds other than anticipated future losses, the value of the stock would plummet and, like the old-time capitalists, major investors could cut their losses only by helping to restore their companies' productivity. Such measures would force financial institutions to become capitalists whose success depends not on trading shares at the propitious moment, but on increasing the productivity of the companies in which they invest.

1. In the passage, the author is primarily concerned with doing which of the following?

(A) Comparing two different approaches to a problem
(B) Describing a problem and proposing a solution
(C) Defending an established method
(D) Presenting data and drawing conclusions from the data
(E) Comparing two different analyses of a current situation



2. It can be inferred from the passage that which of the following is true of majority shareholders in a corporation?

(A) They make the corporation's operational management decisions.
(B) They are not allowed to own more than fifty percent of the corporation's stock.
(C) They cannot make quick profits by selling their stock in the corporation.
(D) They are more interested in profits than in productivity.
(E) They cannot sell any of their stock in the corporation without giving the public advance notice.



3. According to the passage, the purpose of the requirement suggested in lines 30-33 [In addition, any institution that holds twenty percent or more of a company's stock should be forced to give the public one day's notice of the intent to sell those shares.] would be which of the following?

(A) To encourage institutional stockholders to sell stock that they believe will decrease in value
(B) To discourage institutional stockholders from intervening in the operation of a company whose stock they own
(C) To discourage short-term profit-taking by institutional stockholders
(D) To encourage a company's employees to take an active role in the ownership of stock in the company
(E) To encourage investors to diversify their stock holdings



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.



5. It can be inferred that the author makes which of the following assumptions about the businesses once controlled by individual capitalists?

(A) These businesses were less profitable than are businesses today.
(B) Improving long-term productivity led to increased profits.
(C) Each business had only a few stockholders.
(D) There was no short-term trading in the stock of these businesses.
(E) Institutions owned no stock in these companies.



6. The author suggests that the role of large institutions as stockholders differs from that of the “old-style capitalist” in part because large institutions

(A) invest in the stock of so many companies that they cannot focus attention on the affairs of any single corporation
(B) are prohibited by law from owning a majority of a corporation’s stock
(C) are influenced by brokers who advise against long-term ownership of stocks
(D) are able to put large amounts of stock on the market without depressing the stock’s value
(E) are attracted to the stocks of corporations that demonstrate long-term gains in productivity



7. The primary function of the second paragraph of the passage is to

(A) identify problems
(B) warn of consequence
(C) explain effects
(D) evaluate solutions
(E) recommend actions


The fourth choice is correct. It can be inferred from information given in the third and fourth sentences of the second paragraph: In addition, any institution that holds 20 percent or more . . . the value of the stock would plummet.

The passage does not support the first choice. The author states that large institutions are prohibited from owning a majority of the stock in any one corporation. However, the author does not say whether or not other parties are similarly prohibited.

The second choice is also incorrect. The author proposes that institutions that intend to sell a large block of a corporation's stock should be required to give a day's notice: the author does not say that such institutions are already required to do so.

As for the third choice, the only mention of boards of directors, in the first sentence of the passage, refers to a historical past in which individual capitalists could control boards of directors and dictate company policy. However, the passage does not say anything about what role boards of directors currently play in making policy decisions.

The last choice is incorrect because the passage only discusses the relationship between increased long-term productivity and long-term profitability; it does not say anything about the relationship between increased productivity and short-term stock values.

8. The passage supports which of the following statements?

(A) Antitrust laws prevent any single shareholder from acquiring a majority of the stock in a corporation.
(B) Institutions that intend to sell a large block of stock in a single corporation must give at least twenty-four hours notice of the sale.
(C) In most corporations it is the board of directors rather than the corporate managers who make policy decisions.
(D) The sudden sale of a large amount of stock in any one corporation makes the value of the stock go down.
(E) The way corporations are currently run, it is unlikely that increased productivity would lead to short-term increases in stock values.



I personally think this passage's difficulty is around 600. It should not be in 700
GMAT Club Bot
Re: Most large corporations in the United States were once run by individu   [#permalink] 10 Jan 2019, 06:48

Go to page   Previous    1   2   [ 28 posts ] 

Display posts from previous: Sort by

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

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


Copyright

GMAT Club MBA Forum Home| About| Terms and Conditions and Privacy Policy| 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®.