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JohnGalt1
Joined: 10 Feb 2021
Last visit: 13 Apr 2022
Posts: 40
Given Kudos: 109
Location: Fiji
Schools: BU Stern '24 Kellogg '24 Wharton '24
GMAT 1: 580 Q44 V26
GMAT 2: 700 Q47 V40
GPA: 3.44
WE:Account Management (Consulting)
16 Mar 2021, 12:06
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E
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
45%
(medium)
Question Stats:
69% (02:20) correct
31%
(02:44)
wrong
based on 891
sessions
History
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Not Attempted Yet
An investment account may hold money in a variety of forms, including stocks, bonds, mutual funds, or currently uninvested cash reserves. Recent allegations, of insider trading within the pharmaceutical industry have prompted rumors of a market-wide sell-off as those holding stock in non-related industries react negatively to the news. Evidence suggests, however, that there has been no such sell-of, because financial records reveal no unusual increase in the total uninvested cash reserves of investment accounts since the allegations were made public.
The argument relies on which one of the following assumptions?
A) People who held stock in industries unrelated to pharmaceuticals purchased low-priced pharmaceutical stock at unusually highly rates in response to the news.
B) Those who sold their pharmaceuticals stocks and purchased new stocks tended to choose cheaper stocks and buy fewer shares
C) Those holding non-pharmaceutical stocks are skeptical about the possibility of those stocks' values increasing in the near future.
D) Data has not yet been released as to the total volume of trading since the allegations were made public.
E) People who hold stock in industries unrelated to pharmaceuticals are not transferring their money into less risky investments such as bonds and mutual funds.
The argument relies on which one of the following assumptions?
A) People who held stock in industries unrelated to pharmaceuticals purchased low-priced pharmaceutical stock at unusually highly rates in response to the news.
B) Those who sold their pharmaceuticals stocks and purchased new stocks tended to choose cheaper stocks and buy fewer shares
C) Those holding non-pharmaceutical stocks are skeptical about the possibility of those stocks' values increasing in the near future.
D) Data has not yet been released as to the total volume of trading since the allegations were made public.
E) People who hold stock in industries unrelated to pharmaceuticals are not transferring their money into less risky investments such as bonds and mutual funds.
17 Mar 2021, 22:18
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The argument concludes there has been no sell off because the cash reserves of investment accounts did not increase.
Which begs the question whether the money raised from selling the stocks went back into the market or was it held back in the investment accounts.
And for the conclusion to stand it has to be assumed that the money raised did not go back into the market.
Hence E is the right answer.
Which begs the question whether the money raised from selling the stocks went back into the market or was it held back in the investment accounts.
And for the conclusion to stand it has to be assumed that the money raised did not go back into the market.
Hence E is the right answer.
19 Aug 2021, 01:37
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JohnGalt1
Hi VeritasKarishma GMATNinja
please help with this problem?
If I negate option "E", it will mean that "People who hold stock in industries unrelated to pharmaceuticals are transferring their money into less risky investments such as bonds and mutual funds".This will result into decrease in total uninvested cash reserves as money required for purchasing bonds and mutual funds will be taken from "uninvested cash reserves".So this will challenge the premise(no unusual increase in the total uninvested cash reserves) written in argument.So,how can this be assumption?
