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16 Sep 2014, 01:56
Kudos
Bookmarks
Spokesperson: After a series of foreclosures, many homes in our community remain vacant, driving down property values and prompting longtime residents to consider relocating. To reverse this decline, we should offer buyers who intend to live in these homes mortgages requiring no down payment and carrying a low introductory interest rate for two years. After that, the rate would adjust to the prevailing market rate. This plan will stabilize the neighborhood by producing a lasting reduction in the number of vacant homes.
Which of the following, if true, casts the most serious doubt on the spokesperson’s proposal?
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
C. Some longtime residents oppose any plan that might change the neighborhood’s character.
D. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
Which of the following, if true, casts the most serious doubt on the spokesperson’s proposal?
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
C. Some longtime residents oppose any plan that might change the neighborhood’s character.
D. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
16 Sep 2014, 01:56
Kudos
Bookmarks
Official Solution:
Spokesperson: After a series of foreclosures, many homes in our community remain vacant, driving down property values and prompting longtime residents to consider relocating. To reverse this decline, we should offer buyers who intend to live in these homes mortgages requiring no down payment and carrying a low introductory interest rate for two years. After that, the rate would adjust to the prevailing market rate. This plan will stabilize the neighborhood by producing a lasting reduction in the number of vacant homes.
Which of the following, if true, casts the most serious doubt on the spokesperson’s proposal?
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
C. Some longtime residents oppose any plan that might change the neighborhood’s character.
D. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
Situation: A community spokesperson proposes offering mortgages with no down payment and a low introductory interest rate for two years to people purchasing vacant homes as residences. The spokesperson predicts that the plan will stabilize the neighborhood by producing a lasting reduction in vacancies.
Reasoning: Which option most seriously undermines the prediction that the plan will produce a lasting improvement?
The key distinction is between attracting buyers initially and keeping the vacancy rate lower over time. Favorable introductory terms might encourage purchases, but unaffordable payments after the introductory period could lead to renewed defaults, foreclosures, and vacancies. Evidence that many likely buyers could not afford those later payments would therefore undermine the plan's expected long-term benefit.
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
The existing offers differ from the proposal in an important respect: they require substantial down payments, whereas the proposed mortgages require none. Buyers unable or unwilling to make those down payments could find the proposed mortgages more attractive. Thus, the existing offers' limited appeal provides an incomplete comparison. It raises a concern about demand but is less damaging than D, which identifies a threat to lasting occupancy even if the proposed mortgages successfully attract buyers.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
Rising crime may make the neighborhood less appealing, but this option does not show that crime would prevent the proposed mortgages from attracting buyers or producing a lasting reduction in vacancies. It describes another problem in the affected streets without establishing that the proposed solution would be ineffective.
C. Some longtime residents oppose any plan that might change the neighborhood's character.
Opposition could matter if it prevented implementation or undermined the plan's results. However, this option does not establish that these residents could block the proposal or that their opposition would prevent buyers from purchasing and continuing to occupy the homes. Merely identifying opposition by some residents does not directly undermine the predicted lasting reduction in vacancies.
D. CORRECT. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
This directly challenges the plan's ability to produce a lasting improvement. Even if the initial terms attract buyers and temporarily reduce vacancies, many of those buyers would later face payments they could not afford. That creates a risk of renewed defaults and foreclosures, potentially leaving homes vacant again. The option need not prove that the entire plan will fail: the affordability problem among many likely participants casts serious doubt on the spokesperson's prediction.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
The proposal targets buyers who intend to live in the homes, not builders seeking the most profitable construction or resale opportunities. Builders' preference for other investments does not show that prospective residents would reject these homes or be unable to maintain their mortgage payments. Moreover, being less profitable than another investment does not mean that purchasing and renovating the vacant homes would necessarily produce a loss.
Answer: D
Spokesperson: After a series of foreclosures, many homes in our community remain vacant, driving down property values and prompting longtime residents to consider relocating. To reverse this decline, we should offer buyers who intend to live in these homes mortgages requiring no down payment and carrying a low introductory interest rate for two years. After that, the rate would adjust to the prevailing market rate. This plan will stabilize the neighborhood by producing a lasting reduction in the number of vacant homes.
Which of the following, if true, casts the most serious doubt on the spokesperson’s proposal?
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
C. Some longtime residents oppose any plan that might change the neighborhood’s character.
D. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
Situation: A community spokesperson proposes offering mortgages with no down payment and a low introductory interest rate for two years to people purchasing vacant homes as residences. The spokesperson predicts that the plan will stabilize the neighborhood by producing a lasting reduction in vacancies.
Reasoning: Which option most seriously undermines the prediction that the plan will produce a lasting improvement?
The key distinction is between attracting buyers initially and keeping the vacancy rate lower over time. Favorable introductory terms might encourage purchases, but unaffordable payments after the introductory period could lead to renewed defaults, foreclosures, and vacancies. Evidence that many likely buyers could not afford those later payments would therefore undermine the plan's expected long-term benefit.
A. Local lenders already offer mortgages with similarly low introductory rates that have attracted few buyers, but those mortgages require substantial down payments.
The existing offers differ from the proposal in an important respect: they require substantial down payments, whereas the proposed mortgages require none. Buyers unable or unwilling to make those down payments could find the proposed mortgages more attractive. Thus, the existing offers' limited appeal provides an incomplete comparison. It raises a concern about demand but is less damaging than D, which identifies a threat to lasting occupancy even if the proposed mortgages successfully attract buyers.
B. Reported burglaries on streets with multiple vacant houses rose 25 percent last year.
Rising crime may make the neighborhood less appealing, but this option does not show that crime would prevent the proposed mortgages from attracting buyers or producing a lasting reduction in vacancies. It describes another problem in the affected streets without establishing that the proposed solution would be ineffective.
C. Some longtime residents oppose any plan that might change the neighborhood's character.
Opposition could matter if it prevented implementation or undermined the plan's results. However, this option does not establish that these residents could block the proposal or that their opposition would prevent buyers from purchasing and continuing to occupy the homes. Merely identifying opposition by some residents does not directly undermine the predicted lasting reduction in vacancies.
D. CORRECT. Many buyers likely to use the proposed mortgages would be unable to afford the monthly payments at the rates expected to apply after the introductory period.
This directly challenges the plan's ability to produce a lasting improvement. Even if the initial terms attract buyers and temporarily reduce vacancies, many of those buyers would later face payments they could not afford. That creates a risk of renewed defaults and foreclosures, potentially leaving homes vacant again. The option need not prove that the entire plan will fail: the affordability problem among many likely participants casts serious doubt on the spokesperson's prediction.
E. Local builders regard purchasing and renovating these vacant homes as less profitable than constructing new homes in other communities.
The proposal targets buyers who intend to live in the homes, not builders seeking the most profitable construction or resale opportunities. Builders' preference for other investments does not show that prospective residents would reject these homes or be unable to maintain their mortgage payments. Moreover, being less profitable than another investment does not mean that purchasing and renovating the vacant homes would necessarily produce a loss.
Answer: D
07 Aug 2015, 05:42
Kudos
Bookmarks
Cant' understand the logic of the OA.
The question asks us:
Which of the following, if true, represents the most significant potential problem with the plan to attract buyers through special mortgage offers?
OA states that FUTURE event will doubt the CURRENT plan. E.g.
- on the one side OA states that "Low interests rates will likely attract buyers" and this part supports the argument
- on the other hand OA states that "buyers will be unable to make payments when the interest rate goes up after the first two years." - this is something about the FUTURE event and do not has an influence on the attraction AT THE TIME OF ATTRACTION.
The question asks us:
Which of the following, if true, represents the most significant potential problem with the plan to attract buyers through special mortgage offers?
OA states that FUTURE event will doubt the CURRENT plan. E.g.
- on the one side OA states that "Low interests rates will likely attract buyers" and this part supports the argument
- on the other hand OA states that "buyers will be unable to make payments when the interest rate goes up after the first two years." - this is something about the FUTURE event and do not has an influence on the attraction AT THE TIME OF ATTRACTION.
