A certain new banking firm was created as a joint venture of the

Question

﻿A certain new banking firm was created as a joint venture of the companies that had previously been the sole owners of X Bank and the Bank of Y brands. When this new firm began closing down several X Bank locations, the firm encouraged customers of those locations to switch to using Bank of Y instead, but many of the customers refused. The new firm's CEO concluded from this and the fact that the company that owned X Bank originally is still intact, that the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name than to the bank's ownership.

Which of the following is an assumption on which the CEO's reasoning depends?

A. All of the customers who switched were aware that a new firm owned both bank brands.
B. At least some of the customers who refused to switch instead became customers of other banks.
C. The customers' refusal to switch was based on reasons related to loyalty.
D. At least some of the customers who switched did so because of loyalty to the new firm.
E. Most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged.

gmatophobia · Accepted Answer

Conclusion of the argument  : Customers who refused to Switch from Bank X to Bank Y were more loyal to the bank's brand name than to the bank's ownership.

Supporting Evidence  :

Many customers refused to switch from Bank X to Bank Y 
 The company that owned X Bank originally is still intact.

Answer choice elimination  :

A. All of the customers who switched were aware that a new firm owned both bank brands.

This statement targets a different segment of individuals. The conclusion that the author makes is about people who refused to switch. Hence, we can eliminate this option.

B. At least some of the customers who refused to switch instead became customers of other banks.

This is irrelevant to the conclusion. Whether the customers who refused to switch instead became customers of other banks doesn't help us arrive at the conclusion that the customers were more loyal to the bank's brand name than to the bank's ownership.

C. The customers' refusal to switch was based on reasons related to loyalty.

This is a good option to consider. If the customer's refusal was based on reasons related to loyalty, we can conclude that loyalty was at play.

Also, the negation of this statement "  The customers' refusal to switch was  not   based on reasons related to loyalty.   " makes the conclusion fall apart.

Let's keep this option.

D. At least some of the customers who switched did so because of loyalty to the new firm.

Just like Option A, this option targets the wrong segment of individuals. The conclusion that the author makes is about people who refused to switch. Hence, we can eliminate this option.

E. Most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged.

This isn't necessary for us to arrive at a conclusion. Even if most of the people were aware and chose to remain with Bank X as they were more loyal to the brand we can arrive at the conclusion.

Hence, we can eliminate this option.

Option C

KarishmaB · Answer

Premises: Two banks meregd - X Bank and Y Bank. It began closing several X bank locations and asking those customers to switch to Y bank. Many customers refused. (Why? Not given. May be they don't like bank Y, may be they prefer another bank. May be bank Y locations are far from their homes etc.) Original company that owned bank X is still intact and still the owner. Conclusion of CEO of jv: the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name (Bank X) than to the bank's ownership (the company that owns it). The CEO concludes the reason for refusing to switch as loyalty to brand X and not to the owners of brand X. A. All of the customers who switched were aware that a new firm owned both bank brands. Out of scope. The customers who switched are out of scope for us. We are talking about the reasons of those who refused to switch. B. At least some of the customers who refused to switch instead became customers of other banks. The point is why did they refuse to switch to Y. What they did after refusing to switch to Y is irrelevant. Did they not go to any bank? Did they become customers to another bank? It's irrelevant to us. C. The customers' refusal to switch was based on reasons related to loyalty. Correct. Note that the premises do not mention loyalty at all. The conclusion concludes that they refused because of this type of loyalty, not that type of loyalty. The assumption here is that it sure had something to do with loyalty. As we discussed before, what if it was just a matter of far away locations of bank Y or bad infra of bank Y etc? We are assuming that the refusal was based on reasons related to loyalty. D. At least some of the customers who switched did so because of loyalty to the new firm. Again, the customers who switched are out of scope for us. E. Most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged. We are not assuming that they were unaware. If anything, he is assuming that they are aware that the two have merged and that is why he claims that they are not loyal to the bank ownership. To claim that the customers are loyal to the brand name and not to owners, it is essential that the customers know that the owners are still the same. Hence, as given, the option is opposite of a possible assumption. This is a trap answer. Answer (C) Discussion on Assumption Questions: https://youtu.be/O0ROJfljRLU A Hard Assumption Question: https://youtu.be/0j4tovGifIg

Mayank452 · Answer

The correct answer is C and it looks like the right answer. But the question mentions relative loyalty to either the brand name or the ownership. How do we know which one they were talking in point C - loyalty to brand or loyalty to the bank's ownership.

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Posted from my mobile device

MartyMurray · Answer

Interesting question.

Notice that "reasons related to loyalty" can involve both loyalty to the brand name and loyalty to the bank's ownership. They are not reasons related to one type of loyalty. They are reasons related to loyalty in general.

The CEO concludes from the evidence that the customers refused because they were more loyal to the bank's brand name than to the bank's ownership. In doing so, the CEO has assumed that they refused for reasons related to those two different types of loyalty rather than for reasons related to something else, such as convenience.

GmatKnightTutor · Answer

The correct answer choice is perhaps in some ways so obvious it may make you hesitate for a moment. Ultimately, (C) is necessary because, for example, if you were to say that REFUSAL TO SWITCH was NOT based on loyalty, then everything the new firm's CEO would be saying regarding loyalty - "because they were more loyal to the bank's brand name than to the bank's ownership." - would be irrelevant.

VIBHOJAIN · Answer

Hi  Bunuel  can you please explain this question. I marked choice E after applying negation technique.

Rance14 · Answer

If you negate the option B

"At least some of the customers who refused to switch instead became customers of other banks"

it should now become

"None of the customers who refused to switch became customers of other banks."

Doesn't this mean all those who refused to switch banks and did not become customers of other banks did so because they were loyal to bank X. Hence, adding more support to the conclusion that refusing to switch banks was because of loyalty?

So the answer should be 'B'

Can someone please explain what is wrong with my thought process here? Thanks

rebrahimi12 · Answer

I agree with this. I had originally chosen C on my mock exam, but distinguishing between Brand Loyalty and Loyalty to Ownership seems fundamental to the conclusion. That is why I switched. I see why not making the distinction in the answer choice does not necessarily make it incorrect, but it is tricky.

DN10 · Answer

"None of the customers who refused to switch became customers of other banks" - Can we say they did not become customers of other banks due to loyalty? Could it be the case that they had a corpus in one bank and did not want to move it to another bank? Or they had a loan which they did not want to move to another bank?

This option does not say anything about why they did not become customers of other banks. Thats why I eliminated this option.

Do let me know whether the explanation makes sense or I made any errros.

Thanks!

jain67 · Answer

MartyMurray   KarishmaB , I understood the explanations you gave. But I still have a question, when I was solving this question I rejected C because it is something that is stated in the paragraph. How to go about this kind of confusion? How to approach it?

KarishmaB · Answer

Consider this: Nothing about loyalty has been GIVEN to us already. Only premises are GIVEN to us - info that is given. Loyalty is not mentioned in the premises. It is the gap between premises and conclusion. We have to figure out the assumption the author needs to conclude the conclusion. The conclusion is - They are loyal to A, not to B. But first we must assume that the reason is related to loyalty. If not, then the conclusion is irrelevant. It just breaks down. Check out the discussion on Assumption questions here: Discussion on Assumption Questions: https://youtu.be/O0ROJfljRLU A pair of difficult assumption questions: https://youtu.be/ZQnhC4d5ODU

Raman109 · Answer

Understanding the argument - ﻿
A certain new banking firm was created as a joint venture of the companies that had previously been the sole owners of X Bank and the Bank of Y brands. - Background info.

When this new firm began closing down several X Bank locations, the firm encouraged customers of those locations to switch to using Bank of Y instead, but many of the customers refused. - Background info.

The new firm's CEO concluded from this and the fact that the company that owned X Bank originally is still intact, that the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name than to the bank's ownership. - Conclusion. The assumption is that there is no other reason, such as Bank Y branches are very far, their customer service poor, etc.

Which of the following is an assumption on which the CEO's reasoning depends?

A. All of the customers who switched were aware that a new firm owned both bank brands. - "customers who switched" are out of scope.
 
B. At least some of the customers who refused to switch instead became customers of other banks. - "other banks" out of scope.

C. The customers' refusal to switch was based on reasons related to loyalty. - yes. Negate this and the conclusion is shattered.

D. At least some of the customers who switched did so because of loyalty to the new firm. - "Customers who switched" are out of scope.

E. Most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged. - the negation will strengthen the conclusion. Weakener.

Yudhajit22 · Answer

Hello , can someone please clarify on this ?

Assumptions are supposed to be unstated , but the CEO concludes that -

The new firm's CEO concluded from this and the fact that the company that owned X Bank originally is still intact, that the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name than to the bank's ownership.

In that case how can we say that the assumption is : the customers' refusal to switch was based on reasons related to loyalty. ---> since its already stated

DmitryFarberMPrep · Answer

Yudhajit22

Let's use a parallel situation. Imagine that you want to know how late a certain restaurant is open. Their hours are not posted online, but your friend calls and reports that the restaurant closes at 10 pm. When you arrive at 9:15, you find it has already closed. Since you feel that your friend would not lie to you, you conclude that the restaurant worked lied about the closing time.

What is the assumption here? You seem to be overlooking other possibilities: maybe your friend called the wrong restaurant, or maybe the worker was mistaken, or maybe 10 pm was the planned closing time, but something happened to make the restaurant close early. So one way to phrase the assumption is that "The discrepancy in closing time wasn't due to some other reason than lying." A simpler way to say this is "Someone lied about the closing time." Notice that this is NOT a repetition of the conclusion, which makes the more specific assertion that the worker lied.

Same thing with the original argument. The author concludes that it is BRAND NAME LOYALTY rather than BANK OWNERSHIP LOYALTY that is driving customers' decisions. But who says it is either type? Perhaps customers are refusing to switch for some other reason that has nothing to do with loyalty (e.g. some other bank looks more appealing). So the correct answer provides an assumption that is needed (if loyalty is NOT involved, then clearly the argument is wrong) but is not the same thing the conclusion stated.

In general, it's fine to say that is the conclusion is "Some specific thing is happening," then one of the assumptions is "That type of thing is happening" or "This specific thing CAN happen."

Yudhajit22 · Answer

Thanks a lot for the explanation , it really helps a lot to understand these specific type of assumption questions.

shubhim20 · Answer

KarishmaB   Bunuel   MartyMurray  is option C not just restatement of conclusion than how can be this correct in assumption question?

DmitryFarberMPrep · Answer

Scroll up a bit and you'll see that this question has been asked quite recently. Several of us, including Karishma, provided explanations. If you have questions after reading through, let us know.

ablatt4 · Answer

Assumption made by CEO: Customers were  more loyal  to the brand name than the ownership.

A) Extreme language, also not relevant to CEO's assumption
B) Entirely possible but nothing to do with assumption stated
C) If the new bank is charging higher rates or is less accessible or any other feature that differentiates them from the prior bank, and other options, customers would likely switch to a more optimal bank for them for reasons completely unrelated to loyalty
D) This is working backwards, we don't care about those who switched we care about those who refused to do so
E) This is working backwards, as the if they aren't aware about the change in ownership it would prevent loyalty to said ownership from being considerable.

C

MartyMurray · Answer

﻿A certain new banking firm was created as a joint venture of the companies that had previously been the sole owners of X Bank and the Bank of Y brands. When this new firm began closing down several X Bank locations, the firm encouraged customers of those locations to switch to using Bank of Y instead, but many of the customers refused. The new firm's CEO concluded from this and the fact that the company that owned X Bank originally is still intact that the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name than to the bank's ownership.

The CEO's conclusion is the following:

the customers of X Bank who refused to switch did so because they were more loyal to the bank's brand name than to the bank's ownership

The support for the conclusion is the following:

When this new firm began closing down several X Bank locations, the firm encouraged customers of those locations to switch to using Bank of Y instead, but many of the customers refused.

and

the company that owned X Bank originally is still intact

This Critical Reasoning question is a little odd in that the passage does not clearly state what's going on with the two banks, their owners, and the joint venture. At the same time, it appears to be the case that the CEO's reasoning is basically the following:

Since some X Bank customers refused to switch to using Bank of Y even though the owner of X Bank is now also an owner of a joint venture that, presumably, owns Bank of Y, those customers must have been more loyal the the X Bank Brand than to the owner of X Bank.

Which of the following is an assumption on which the CEO's reasoning depends?

This is an Assumption question, and the correct answer will state something that must be true for the evidence provided to effectively support the conclusion.

A. All of the customers who switched were aware that a new firm owned both bank brands.

The argument is about the motivation of the customers who did  not  switch.

So, the argument works regardless of whether this choice, which is about the customers who  did  switch, is true.

After all, this statement about what customers who did switch were aware of would not indicate anything about why other customers did not switch.

Eliminate.

B. At least some of the customers who refused to switch instead became customers of other banks.

This choice doesn't have to be true for the argument to work.

After all, if customers who refused to switch instead became customers of other banks, in doing so, they indicated that they were not loyal to either X Bank or the company that owns X Bank. If they were not loyal to either, then there's no reason to believe that they were more loyal to one than to the other.

So, if anything, this choice weakens the case for the conclusion.

Eliminate.

C. The customers' refusal to switch was based on reasons related to loyalty.

This choice is interesting. Here's why.

Analyzing the CEO's argument, we see that it jumps from evidence about customers not switching from X Bank to Bank of Y even thought the owner is the same to a conclusion about which entity the customers are more loyal to.

Where did that conclusion about loyalty come from? All the customers did was refuse to switch. They never said that their motivation was loyalty to the brand.

So, we see that the CEO saw that some customers refused to switch and assumed that they did so because they were more loyal to the brand than to the owner.

In other words, for the evidence that customers refused to switch to support the conclusion that they did so because they were more loyal to the brand than to the owner, it must be true that their refusal to switch was based on reasons related to loyalty, and not based on something else.

So, this choice states an assumption on which the argument depends.

Keep.

D. At least some of the customers who switched did so because of loyalty to the new firm.

The argument is about the motivation of the customers who did  not  switch.

So, the argument works regardless of whether this choice, which is about the motivation of the customers who  did  switch, is true.

After all, this statement about why customers did switch would not indicate anything about why some customers did not switch.

Eliminate.

E. Most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged.

This choice weakens the argument rather than states an assumption on which the argument depends.

After all, if most of the customers who refused to switch were unaware that the companies that owned the two bank brands had merged, then in refusing to switch to Bank of Y, they were not showing more loyalty to X Bank than to the owner of X Bank. After all, if this choice is true, then they were not even aware that the owner of X Bank owned Bank of Y.

In that case, they weren't being more loyal to the X Bank brand than to the owner of X Bank. Rather, they were unaware that being loyal to the owner of X Bank by switching to Bank of Y was even possible.

Eliminate.

Correct answer:   C

A certain new banking firm was created as a joint venture of the

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GMAT Critical Reasoning (CR) Questions

A certain new banking firm was created as a joint venture of the

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