Given the increasing popularity of online brokerage firms, the fact th

Question

Given the increasing popularity of online brokerage firms, the fact that these firms have started to offer their clients other financial services is hardly surprising. In some cases, customers can simply link their online stock portfolios with traditional accounts held by other financial institutions. More and more online brokers, however, offer their own interest-bearing checking accounts, money market accounts, and retirement accounts, and even provide mortgages and home equity loans.

Some investors are understandably attracted to the idea of a one-stop shop for all their financial needs, and indeed there are conveniences to having one’s various asset accounts linked together. But consumer advocates point out that this convenience extends to criminals intent on gaining access to funds and financial data. As Francis Golsen of the Investor Protection Bureau points out, “Combining your assets at one financial institution is a bit like using your parked car to store your jewelry. If you become a victim of theft, there’s that much more to thieve.”

Another danger is that investors may be less selective when deciding which financial institution to use for various services, given that the easiest choice is to use one company for every service. The temptation not to shop around may lead to a hasty decision. This fact is not lost on brokerage firms, whose marketing departments are quick to take advantage of the cross-selling potential inherent in offering so many products. As a result, those who use one-stop banking should expect an increase in promotional material clogging their email inboxes.

To be fair, we are now seeing some very attractive products as more brokers get into the act of providing additional services. Some firms are offering checking accounts with interest rates so high that these accounts are most likely “loss leaders” designed to get investors interested in other financial products offered by the firm. But this can only last so long. No investor should assume that their beloved brokerage house, which now advertises free trading and checking accounts with interest rates of 3.9% (and no minimum balance required!) will continue to provide these offers a month after they were first made.   1 
 D 
1. Which of the following is NOT mentioned in the passage as a possible negative result of “one-stop” banking?

(A) The potential for criminal wrongdoing is heightened.
(B) Investors may not sufficiently explore their options. 
(C) Investors may receive unwanted marketing offers.
(D) Brokerage firms may lack sufficient expertise in managing other 
financial services such as mortgages and home equity loans.
(E) Investors may wrongly assume that certain introductory offers are still in place.

2 
 A 
2. The primary purpose of the passage is to _______.

(A) alert readers to certain risks associated with using “one-stop” shopping for financial needs
(B) give examples of the ways in which online brokers have diversified their services
(C) raise questions about the legitimacy of cross-selling financial services
(D) advise investors not to link traditional bank accounts with online accounts
(E) provide an overview of recent changes in online brokering

3 
 C 
3. It can be inferred from the passage that the increase in the number of online brokers who offer banking services _______.

(A) was a result of consumer dissatisfaction with the level of service offered by traditional banks
(B) could come to an abrupt end without much warning
(C) has led to some financial products that appear to be very desirable to investors
(D) has contributed to an increase in the number of crimes involving the theft of financial data
(E) is, despite some risks, generally beneficial to investors who want to diversify their stock portfolios

4 
 C 
4. The purpose of the second paragraph is to make which of the following points?

(A) Linking many of one’s financial assets is risky and no more convenient than keeping one’s banking and online portfolios separate.
(B) One-stop banking puts investors at risk for more than just theft of assets and financial data. 
(C) Using one firm for many financial services puts one at a greater risk of theft than using several institutions does.
(D) Investors who use their online broker for diverse banking services risk making hasty financial decisions.
(E) Traditional banking services such as mortgages are best provided by traditional banks.

FightToSurvive · Answer

Though RC is my biggest challenge...I gave it a try!!!
D
A
C 
B( Though the passage is not very well segregated as paragraphs)

atturhari · Answer

1 - E. 
(D) is not correct. 
Brokerage firms may lack sufficient expertise in managing other financial services such as mortgages and home equity loans.
  More and more online brokers, however, offer their own interest-bearing checking accounts, money market accounts, and retirement accounts, and even provide mortgages and home equity loans.

2 - A

3 - B (this is tough for me)
Talks about banking.
 No investor should assume that their beloved brokerage house, which now advertises free trading and checking accounts with interest rates of 3.9% (and no minimum balance required!) will continue to provide these offers a month after they were first made.

4 - B

deepudiscover · Answer

Hi  soumya170293

Q3 is asking to infer and the answer can be found in the first line. "Given the increasing popularity of online brokerage firms, the fact that these firms have started to offer their clients other financial services is hardly surprising."

Hope its clear. Press kudos if you like

avinsethi · Answer

IMO :

Last question : "(C) Using one firm for many financial services puts one at a greater risk of theft than using several institutions does " can not be correct since, according to the paragraph, using one firm for all services does not increase the risk of theft instead it makes one more vulnerable in case of theft.
Best answer (B).

Skywalker18 · Answer

Took 8 mins 30 seconds in total, including almost 4 mins to read . All correct ; easy passage .

Which of the following is NOT mentioned in the passage as a possible negative result of “one-stop” banking?
(D) Brokerage firms may lack sufficient expertise in managing other financial services such as mortgages and home equity loans. - Correct

The primary purpose of the passage is to _______.
(A) alert readers to certain risks associated with using “one-stop” shopping for financial needs - the passage lists of the negatives of one-stop shopping for financial needs

It can be inferred from the passage that the increase in the number of online brokers who offer banking services _______.
(C) has led to some financial products that appear to be very desirable to investors - To be fair, we are now seeing some very attractive products as more brokers get into the act of providing additional services.

The purpose of the second paragraph is to make which of the following points?
(C) Using one firm for many financial services puts one at a greater risk of theft than using several institutions does. -As Francis Golsen of the Investor Protection Bureau points out, “Combining your assets at one financial institution is a bit like using your parked car to store your jewelry. If you become a victim of theft, there’s that much more to thieve.”

Akshit03 · Answer

(D) Brokerage firms may lack sufficient expertise in managing other 
financial services such as mortgages and home equity loans.
(E) Investors may wrongly assume that certain introductory offers are still in place.

Is answer to first D or E?
As far as i see, D is mentioned in the passage but E has nor relevance and is not mentioned anywhere?
So how is the answer D instead of E?

sandman13 · Answer

It can be inferred from the passage that the increase in the number of online brokers who offer banking services _______.
(A) was a result of consumer dissatisfaction with the level of service offered by traditional banks
(B)  could come to an abrupt end without much warning 
(C) has led to some financial products that appear to be very desirable to investors
(D) has contributed to an increase in the number of crimes involving the theft of financial data
(E) is, despite some risks, generally beneficial to investors who want to diversify their stock portfolios

urvashis09 , choice B: the passage points out some cons to one-stop system but never suggests this could lead to an end of this system in any way. This has not been talked about in the passage at all.

sumitsrj99 , I think you're getting fixated over the analogy presented in paragraph 2 to explain the point that there is a lot to steal at one place.

Relevant text in blue (don't fixate on red part):
But consumer advocates point out that this convenience extends to criminals intent on gaining  access to funds and financial data . As Francis Golsen of the Investor Protection Bureau points out, “Combining your assets at one financial institution is a bit like using your  parked car to store your jewelry. If you become a victim of theft, there’s that much more to thieve .”

The purpose of the second paragraph is to make which of the following points?
(A) Linking many of one’s financial assets is risky and no more convenient than keeping one’s banking and online portfolios separate.
(B) One-stop banking puts investors at risk for more than just theft of assets and financial data. 
(C) Using one firm for many financial services puts one at a greater risk of theft than using several institutions does.
(D) Investors who use their online broker for diverse banking services risk making hasty financial decisions.
(E) Traditional banking services such as mortgages are best provided by traditional banks.

shauryahanda · Answer

Hi guys , i need help in the fourth que ,

Nowhere has the risk of investing been compared to risk of investing in multiple banks. It is possible that risk may be high for investing in multiple banks also , so how can we say ans is C and not B

Please help as i am really getting confused

bM22 · Answer

Hi  shauryahanda ,

can be inferred from the lines: "But consumer advocates point out that this convenience extends to c riminals intent on gaining access to funds and financial data . As Francis Golsen of the Investor Protection Bureau points out,  “Combining your assets at one financial institution is a bit like using your parked car to store your jewelry.  ". 2nd para continues from the 1st one on the idea that having one firm for all financial needs is not in the best interest of the investors and then the author provides an analogy for the same.

Thus C is the correct answer.

Let me know if you still have issues.
Thanks.

moielite · Answer

plz explain the 3rd and 4th
i did D for 3rd and B for 4th but answers are C for both of them respectively

Sajjad1994 · Answer

Official Explanation

3. It can be inferred from the passage that the increase in the number of online brokers who offer banking services _______.

Difficulty Level:   650

Explanation

The  final paragraph  states that  “... we are now seeing some very attractive products as more brokers get into the act...”  Therefore, the increase has led to some desirable financial products (though we are also told that these products may be short-lived).

(A):  We are never told that customers were unhappy with their traditional accounts.

(B):  What could come to an abrupt end are the attractive offers mentioned in the last paragraph, not the number of online brokers making these offers.

(D):  This might be the case, but we are not told that there has actually been an increase in this sort of crime, though it is now more  “convenient”  for the criminal to access investors’ financial data.

(E):  The diversification of stock portfolios is not discussed. The diversification of the financial services offered by online brokers, however, is mentioned.

Answer: C

4. The purpose of the second paragraph is to make which of the following points?

Difficulty Level:   600

Explanation

The passage indicates that, while convenient for investors, using one financial institution for all services is also convenient for criminals. Golsen compares this to leaving jewelry in a car; more than just the car is at risk. This supports the point that one-stop banking makes theft more convenient for the criminal.

(A):  Actually, the passage states that linking assets can be more convenient.

(B):  There is no mention of risk to anything other than theft of assets and financial data.

(D):  This point is discussed in the third paragraph, not the second.

(E):  Nowhere is the comparison between traditional banks and online banks made.

Answer: C

AaronPond · Answer

EXPLANATION OF QUESTION #4   
It is very important when you look at RC questions to let the passage define the words in the answer choices. Sometimes, we as readers have a certain, narrow definition of a word in our minds that leads us to misinterpret the question. For example, in answer choice   (C)  , it reads "  Using one firm for many financial services puts one at a greater risk of theft than using several institutions does.  " We might look at the phrase "  greater risk of theft  " and think it means "  greater percentage chance of a theft.  " However, while "  greater risk of a theft  " can refer to the   chance   of a risk, it can also refer to the   magnitude   of the theft loss. In other words, if a thief gains access to your account, they can steal more. The risk is therefore greater. Answer choice   (C)   matches with the purpose of the second paragraph, which basically argues that putting all your "eggs in one basket" makes it easier to steal all the eggs.

None of the other answer choices match with the "Big Picture" of the second paragraph. Answer choice   (A)   is contradicted by the paragraph, which states that a one-stop shop can be convenient. Answer choice   (B)   goes beyond what the paragraph states. Nowhere in the second paragraph do we see a description of risks outside of thieves gaining access to "  funds and financial data.  " Answer choice   (D)   is what I call in my classes an "  I Remember That... Trap.  " While   (D)    IS  mentioned in the passage, it is found in the third paragraph, not the second. We are tempted by it because we remember the passage talking about it, but   (D)   doesn't answer the question. And answer choice   (E)   is nowhere to be found in the second paragraph.

Notice, even if you are not sure about what the question means when it says "  greater risk  ," none of the other answer choices come even close. It is often easier to   eliminate clearly wrong answers   than it is to pick the correct answer -- especially if we fall into the trap of looking for an answer that is crafted in the same way we would want to say it.

Given the increasing popularity of online brokerage firms, the fact th

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GMAT Reading Comprehension (RC) Questions

Given the increasing popularity of online brokerage firms, the fact th

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