The fiscal year--- yet another new Praradox Q from gmatclub

Now that you know you're right, can you explain how you got to your solution?

Let me try and give my explanation for this one.


First let us identify what the question is asking. At its simplest , it is asking for a supporting evidence ( of event) to confirm analyst's finding. Now what was the analyst finding - it was that the profit was a fluke/flash in a pan/not something which might happen again on a sustainable basis.

Now analysing the options

a) RBI appointed a new chairman / MD for the bank -- Agree that this will not happen every year so the once off profit could be attributed to the initial euphoria of a new head honcho but still not 100% conclusive. Will keep it in contention.

b) high profile business trips , old customers leaving the bank -- This , if not anything is contrary to the fact that there would have been profits . so out right rejected.

c) Release of funds - Some funds which were wrongfully taken from the bank in past were released this year thereby contributing to its bottom line. Looks like a very strong contender to support the claim of analyst that this won't happen evey year .

d) Film funding -- Starts on a good note but the bombing of the films is contrary to the fact that banks had a profit this year.

e) Old chairman elevated to Deputy governor -- Like a this is a once off event which potentially could cause the bank to show temporary profits , for eg - stocks of the bank rising in values because of investors speculating that the new deputy governor might issue policies in support of his old org.


Now we see that a, c and e are the possible candidates to explain the analyst's paradoxical thoughts. Out of these 3 , only c is conclusive , fact ridden so I would choose c. A and E are giving vague indicators and need to be supplemented by extra assumptions to explain the profit of the bank.


Hope this helps

The answer seems to be C. The revenue in 10-11 did not increase and was only 4 b while profit increased to 1.3 B. In 09-10 revenue was more 4.28b but profit was just 600 M. Option C explains clearly the paradox by giving the source of increase in profits without increasing revenue.

where grammer is going in this question. what "that, that" is doing in last sentence of the argument.

Firstly: I fail to understand why C is preferred over E.
C->>> We do not know what is the relation between national Housing Bank and Sindian Bank unless we assume that Sindian Bank was involved in housing finance.

Secondly: Is option D correct , grammar point of view? It reads "whose films bombed at box-office. " should it not be "whose films bombed were at box-office. " . The current phrasing confuses me with "whose films bombed the box-office." , which means the films were a success.

Please convey me your thoughts on these, especially on the second issue.

ok, so we have 2010-2011 with Rev 4B and NP 1.3B
2009-2010 - R=4B and NP=600MLN

investors think not bad
analysts say - meh

why so?

it must have been something that happened during that period
maybe the 09-10 net profit was affected by an event that had to lower the net profit in 09-10, and after solved, resulted in an inflated 2010-2011 net profit. If this is the case, the net profit in 2010-2011 might have been way below the net profit in 09-10, and thus, the analysts opinion that the results are not that good as it might seem is explained.

A. The RBI appointed a new chairman cum MD in April 2011 for the said Bank.
even if it was appointed, how does this action explain the disappointment of the analysts? Out.

B. During October 2010 to Feb 2014 the high-fly new banking chairman took on business exploration trips from Alaska to Antarctica, from Jamaica to Bangkok and from Alps to Andes, resulting in an expenditure of $300M and some old customers withdrawing their deposits.
the time-frame 2010-2014 - well..it might have happened in 2013 - thus the expenditures of 300M happened after the period we discuss. Out

C. In June 2009, The national Housing Bank, an overseer bank for institutions that offer housing finance, impounded $800M as doubtful assets on some difference of opinion about definition of doubtful assets, which was ordered to be released by the Supreme Court in December 2010.
Aha! so in 09-10 - the net profit was decreased by 800MLN, and thus the total net profit in 09-10 would have been 1.4B, instead, it got only 600MLN.
since these 800 MLN were added to the 2010-2011 - the real net profit of 2010-2011 would have been 500 MLN. That's even worse than 09-10 with the 800 MLN impounded. This does explain why the analysts are reluctant to say that 2010-2011 was a good year.

D. In order improve business; the New chairman sanctioned $2B worth loans to some film production units, whose films bombed at box-office.
irrelevant. It does not explain the discrepancies.

E. The old chairman of the bank was elevated to the post of Deputy Governor of Reserve bank following his transfer from Sindian Bank
so what? it does not explain why the analysts are disappointed with the results.

C is thus the best.

Hi Experts

As per OA C is correct
But no where its mentioned that funds released by supreme court order came to Sindian Bank , infact it mentions "The national Housing Bank"
Fail to understand how everybody is assuming that funds came to Sindian Bank.

Also confused about usage of word "bombed" used in choice D
It is that film did great business or did it failed badly?
Because in case it does great business , then this choice can explain the paradox.

Please clarify

when smth is impounded, and when this smth has to be released, it has to be released to the rightful owner.
for just in case, I provide an example with impounded cars by police. The police will not release the car to anyone unless a power of attorney, from the rightful owner is presented. Moreover, we have "definition of doubtful assets" - so before it was thought to be doubtful, now not. legally, it should be returned to the owner, otherwise this is called stealing. Moreover, if such is the case, it might be that the bank was the subject to raider attacks, which are as well illegal.

Thanks mvictor for answering my query.
As you stated if anything is released to rightful owner, that's my point that nowhere its mentioned that Sindian Bank is the rightful owner of the funds released.

Hope I am making myself clear on what the query is.

it is no need to say to whom it was returned, because that's not how it works when smth is impounded.

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