PrashantPonde
Adding one more question:
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 think the answer here is D. To me, the contenders were D and E.
Going through the choices, my thought process was:
A - antitrust laws apply to large institutions only, and the answer of 'any single shareholder' is too broad.
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 stockB - this is a proposal, not a law or regulation, so the passage does not support this choice. This is in the second paragraph.
C - this choice is a tough one. The passage doesn't make explicit the nexus between policy decisions and the board or managers; the only mention is in the first sentence of the passage. But I think the last sentence of the first paragraph implies management are responsible for policy decisions - there's no mention of the board in making decisions. Or put another way, you need to negate the answer by making an inference, and here it's that boards may provide company policy but it's management that makes the decisions.
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.D - I think the relevant line was too clear, making me more than suspicious that I've selected the wrong answer!
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.E - this one looks like a stretch. Using the final line of the first paragraph (again), my take is that companies are currently run to maximise short term profits, but there is no linking of productivity and stock values in the short term. If I was looking for a way to negate the answer, putting on my investor hat, I'd say investors are influenced by quarterly earnings (or similar) so any news that companies are trying to increase productivity should increase the stock price.
As I note above, E was one of my contenders. My rationale at rejecting the answer was that the passage refers only to long-term productivity, so we have nothing about short-term productivity to draw any inferences. It also helps that the relevant part of the passage for choice D was pretty clear (I think it is!). Still, my answer, and therefore my reasoning, could be wrong.
I would love to know the answer for this one if someone is willing to help out.
Hey regarding choice B. I'm not sure it is correct to assume here that a passage needs to support an assertion only if it is a law/regulation? This is too centric to this particular passage talking about laws while the question is a generic one. Moreover, the passage does support this with a clear statement. (The author is suggesting it in the passage, thus the passage is supporting it?) Thoughts here?