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# The decline in the price of biotech stocks has hurt many institutions

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Joined: 02 Nov 2016
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The decline in the price of biotech stocks has hurt many institutions  [#permalink]

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20 Mar 2019, 07:47
00:00

Difficulty:

15% (low)

Question Stats:

82% (01:40) correct 18% (02:22) wrong based on 101 sessions

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The decline in the price of biotech stocks has hurt many institutions that had invested heavily in biotech companies. Last year the state university added 200,000 shares of a biotech stock to its holdings. The stock in question has declined in value by more than 90 percent over the last 12 months. The college, however, did not purchase the stock, but received it as a gift. Therefore, the price decline will not harm the university’s finances.

Which of the following, if true, casts the most doubt on the conclusion that the price decline of biotech stocks will not harm the university’s finances?

A. The biotech sector is volatile; some stocks that lose 90 percent of their value in one year may regain all of their value and more in the following year.

B. The university needs to pay capital gains taxes only on a stock sale that results in a gain; stocks sold at a loss will incur no tax penalty.

C. Although the biotech sector is down, the overall health-care sector, in which the university has invested heavily, is up for the year.

D. The biotech company in question has a promising new drug in development that could revolutionize the treatment of type II diabetes.

E. The university began construction of a new laboratory last year that the provost had expected to pay for with the proceeds from the sale of the biotech stock in question.

Source: McGraw Hill's GMAT (5th)
Difficulty Level: 650

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Re: The decline in the price of biotech stocks has hurt many institutions  [#permalink]

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09 Apr 2019, 06:02
The answer is E because it weakens the conclusion that the decline in price of stock wont affect them.

The college was banking on paying for the construction from the profits of the stock. But since now no profits are there it will impact them.

A - conditional statement..may or may not happen
B - sort of Strenghtens
C - irrelevant/ out of scope
D - irrelevant/ out of scope

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Re: The decline in the price of biotech stocks has hurt many institutions   [#permalink] 09 Apr 2019, 06:02
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