Since savings banks have to use short-term deposits to finance long-te

Question

Since savings banks have to use short-term deposits to finance long-term fixed-rate mortgage loans, they sometimes lose money  when there is a rise in short-term rates and, on the other hand, they are unable to raise  the rates on their mortgages.

(A) when there is a rise in short-term rates and, on the other hand, they are unable to raise
(B) when short-term rates rise and they are unable to raise
(C) when a rise in short-term rates occurs and, correspondingly, there is no rise possible in
(D) with a rise in short-term rates, and they are unable to raise
(E) with short-term rates on the rise and no rise possible in

skovinsky · Accepted Answer

Scanning the choices, we see a 3-2 split right at the start, between "when" and "with". We definitely want "when" in this sentence, so eliminate D and E.

Scanning A, B and C, we see 3 very different connectors: A has "on the other hand", B has "and" and C has "and, correspondingly". "On the other hand" makes no sense in this sentence; there's no simply contrast. Similarly, "and, correspondingly" doesn't flow - "correspondingly" doesn't add anything to the simple "and". C is also passive, whereas B is active - another reason to eliminate C.

Choose B!

ajit257 · Answer

Hi Stuart, 
 I was stuck between b and d. I am not clear about this 3-2 split and how did you choose b over d. thanks for your help !

rg1 · Answer

I'll try to explain.
Can you lose money 'with' a rise in short-term rates?
Can you lose money 'when' there is a rise in short-term rates?

I think second usage is correct. 
I chose A over B thinking there is a contrast between two situations. After reading closely, I found that there are two things occurring simultaneously. Therefore, 'on the other hand' is incorrect.

shubhamg266 · Answer

You guys are ridiculous. Everyone just checks the answer and tries to justify it in any manner sounding as logical as he can. How conveniently everyone explained why the answer should be B. Can't you see the clear ambiguity in that sentence?

It says:

In this sentence, B clearly refers to short-term rates, not to banks still you have marked this as the right answer. Pathetic response from the community on this one. Disappointing.

suramya26 · Answer

Though B is more concise than C, the reason I chose C was because C was parallel and B was not ("rise" and "raise").
Can somebody throw more light on this?????????????

EducationAisle · Answer

Hi  suramya26 , believe it or not, in B, the parallelism is between  rise  and  are  (both of them  verbs )

Not only is C not as concise, it changes the  meaning  of the original sentence. It says:

.....there is no rise possible in the rates on their mortgages.

So, C does not state  who  cannot raise the rates on their mortgages. The original sentence says that the  banks  cannot raise the rates on their mortgages.

So, C  changes  the meaning of the original sentence.

Arpitkumar · Answer

They loose money ..... they are unable to raise ... too much ambiguity over pronoun "they" in option B?

thangvietnam · Answer

i am confused.
is this from official source. ?

guptakashish02 · Answer

I think B would have been correct if 
(B) when short-term rates rise , and they are unable to raise 
we are joining two independent clauses so we need " , and "

Harsh2111s · Answer

Since savings banks have to use short-term deposits to finance long-term fixed-rate mortgage loans, they sometimes lose money when there is a rise in short-term rates and, on the other hand, they are unable to raise the rates on their mortgages.

(A) when there is a rise in short-term rates and, on the other hand, they are unable to raise
on the other hand shows - succeeding clause doesn't depend on preceding clause.
It is used to show contrast but here we are discussing when banks lose money .

(B) when short-term rates rise and they are unable to raise
Perfect parallelism

(C) when a rise in short-term rates occurs and, correspondingly, there is no rise possible in
Parallelism issue.

(D) with a rise in short-term rates, and they are unable to raise
Use of "with" is not correct "losing money" and "rise in rates" are not occurring together, but first there is a rise in rate and then banks lose money.

(E) with short-term rates on the rise and no rise possible in
Same as D

Hope it helps

emcheeks · Answer

Since savings banks have to use short-term deposits to finance long-term fixed-rate mortgage loans, they sometimes lose money when there is a rise in short-term rates and, on the other hand, they are unable to raise the rates on their mortgages.

(A) when there is a rise in short-term rates and, on the other hand, they are unable to raise

1) "when" is correct in this choice. Why use "when" though? (I will talk about "with" in D and E). Notice that we have "they sometimes lose money" --> seems like this event will happen on the condition that ... Another case is that we use "if". But when do we use if? --> when we want to say some events have a possibility of happening. For example, and indicator is "can". I know this is not tested in this problem, but it is actually tested on GMAT. A related problem would be here: https://gmatclub.com/forum/rising-inven ... 97784.html

2) "there is", "that is" should be avoided in GMAT (there are definitely exceptions but try to avoid them if no other mistakes). Here, "short-term rates rise" (choice B) is better than "there is a rise in short-term rates" (choice A).

3) I saw some people argue that there is no contrast, and therefore, "on the other hand" is wrong. However, it is wrong because "and, on the other hand" is wrong as a unit. For example: "and however", "but however", and "after when" are wrong.

(B) when short-term rates rise and they are unable to raise

Correct.
Notice that there is no "comma" before "and" even we have seemingly two independent clauses. However, a comma is not needed. This is because: when two clauses are subordinate to one independent clause, a comma should be omitted. Here, we have "short-term rates rise" and "they are unable to raise" two seemingly independent clauses but are subordinate to "when" clauses. Therefore, a comma is omitted. If we add a comma, the meaning would change.
They sometimes lose money when short-term rates rise, and they are unable to raise the rates on their mortgages.
The above sentence sounds like "they are unable..." is parallel to "they sometimes lose money" which completely changes the meaning. Therefore, a comma should not exist here.

(C) when a rise in short-term rates occurs and, correspondingly, there is no rise possible in

"a rise in short-term rates" is wordy compared to "short-term rates rise" in B. In addition, "no rise possible" should be "no possible rise".

"no rise possible in" also changes the meaning because it means differently than "they are unable" --> no rise at all vs. not able to raise --> different meaning.

(D) with a rise in short-term rates, and they are unable to raise

first, "a rise in short-term rates" is a noun phrase and "they are unable..." is a clause. They are not parallel. Since we have a comma before "and", the clause "they are unable..." must be parallel to "they sometimes lose money". However, that changes the intended meaning. Therefore, wrong.

In addition, the "with" is wrong because it sounds like it is modifying "money". However, "money" itself cannot have a rise in rates. It changes the meaning.

(E) with short-term rates on the rise and no rise possible in

"with" is wrong based on the explanations in D.

In addition, "no rise possible in" is wrong based on the similar explanations in C.

ShankSouljaBoi · Answer

Totally puzzled with this one :
 1. How to eliminate A and C ???

I eliminated B because  IC  ,  and IC  is the standard format.   DC , IC   could have worked with B but there is a and in between so that is also not possible. How is B ok ??

they sometimes lose money    when short-term rates rise    (a dependent clause nested in the highlighted yellow independent clause)  and   they are unable to raise the rates on their mortgages  (another independent clause).

Is when in ellipsis form ? When X and When Y

Not able to understand the structure, tagging experts

GMATGuruNY   generis

GMATGuruNY · Answer

OA:  Banks...lose money when  short-term rates rise  and  they are unable to raise the rates on their mortgages . 
Here, no comma precedes  and  for a reason.
The implication is that the two independent clauses in green must BOTH happen in order for the banks to lose money.
Thus:
When short-term rates rise, the banks might NOT lose money.
When banks are unable to raise their rates on mortgages, the banks might NOT lose money.
But when BOTH events happen -- short-term rates rise, banks are unable to raise their rates on mortgages -- the result is that the banks lose money.

Proposed version:
 Banks...lose money when short-term rates rise and when they are unable to raise the rates on their mortgages. 
Conveyed meaning:
 Banks...lose money  when short-term rates rise . 
AND
 Banks...lose money when  they are unable to raise the rates on their mortgages . 
Not the intended meaning.
As noted above, BOTH of the events in red must happen in order for the banks to lose money.

If a VERB in one answer choice is transformed into a NOUN in another answer choice, be skeptical of answer choices that include the noun.
In most cases, the verb will be preferable to the noun.
In B,  rise  serves as a VERB.
In A and C,  rise  serves as a NOUN.
Since B includes the verb form of  rise  and is free of errors, B is preferable to A and C.

AliciaSierra · Answer

DmitryFarber ,

How can I eliminate option A ? I believe by using ( on the other hand), option A is showing emphasis on later part of sentence.

Banks lose money when X happens and, on the other hand, Y doesn't happen.

I was able to narrow down options to A and B. I rejected B because COMMA is missing before last AND in option B. I thought two Independent Clauses should be connected by COMMA+AND.

romil666 · Answer

Since savings banks have to use short-term deposits to finance long-term fixed-rate mortgage loans, they sometimes lose money when there is a rise in short-term rates and, on the other hand, they are unable to raise the rates on their mortgages.

(A) when there is a rise in short-term rates and, on the other hand, they are unable to raise
on the other hand shows - succeeding clause doesn't depend on preceding clause.
It is used to show contrast but here we are discussing when banks lose money .

(B) when short-term rates rise and they are unable to raise
Perfect parallelism

(C) when a rise in short-term rates occurs and, correspondingly, there is no rise possible in
Parallelism issue.

(D) with a rise in short-term rates, and they are unable to raise
Use of "with" is not correct "losing money" and "rise in rates" are not occurring together, but first there is a rise in rate and then banks lose money.

(E) with short-term rates on the rise and no rise possible in
Same as D

Hope it helps

and how to approach in similar scenarios?

Regards, Romil

sssanskaar2 · Answer

Guys, I am no expert, but I'll chime in here with my two paises. (converting the saying in my local currency

) A: when there is rise.... - STOP! 'There is' ?? Where? - 'There' has no place to refer to. B : In GMATNinja sir's words - "grammar looks good and logic seems fine as well. Let's keep it till we find a better option." Banks lose money when XYZ happens and they are unable to do ABC. - Absolutely nothing wrong. Example sentence - I lose my mind while driving when a sudden traffic jam occurs and I am unable to switch to a low traffic route.

C : ......, there is no rise possible... - STOP! 'There is' ?? Where? - 'There' has no place to refer to. D : .... banks sometimes lose money WITH XYZ and they are unable to raise rates... - wait a minute. Isn't the intent of original sentence is to give the two conditions in parallel as reasons why banks lose money? 'WITH' breaks that parallelism. E : ..... banks sometimes lose money WITH XYZ and NO RISE POSSIBLE.. - Hol'up! NO RISE POSSIBLE?! That's rude man! Banks are unable to raise the rate of mortgages SOMETIMES, but NO RISE POSSIBLE just eliminates the possibility of raising the mortgages altogether. There you have it guys, B is the CLEAR winner. Hit Kudos if you are satisfied with the explanation and follow the man, the myth, the legend GMATNinja sir!

lakshya14 · Answer

Does the meaning in (b) is conveyed? In (A) in says at the same time, whereas in (B) it forms a new clause and is looking like its separate from the main sentence?

Takafumi07 · Answer

(B) when short-term rates rise and they are unable to raise

would "they" be ambiguous because there are multiple plural nouns (banks, loans, rates) in the sentence.

lakshya14 · Answer

No, there is no ambiguity of "they".
It is the pronoun for the subject of the previous dependent clause "savings bank". Had it be any other subject as banks or rates then it would be wrong.

Since savings banks have to use short-term deposits to finance long-te

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Since savings banks have to use short-term deposits to finance long-te

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