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Lets take a stab at it.

(A) adjustment of interest rates on mortgages held by individuals is both a recognition of the depth of the financial crisis and an attempt to balance its books.The two subordinate phrases are properly controlled by the one both. everything looks good.

(B) adjustment of interest rates on mortgages held by individuals both recognize the depth of the finance crisis and attempt to balance their books. Easiest point to eliminate here is that the verb recognize is plural for the singular bank. We see that again as "their" books when it sould be "its books" There is also a logical error. The interest rates to not recognize the depth of the crisis.

(C) adjustment of interest rates on mortgages held by individuals is a recognition both of the depth of the financial crisis as well as an attempt to balance its books. We are not trying to recognize an attempt to balance the books. I'll call this a structural or logic error.

(D) adjusting interest rates on mortgages to individuals is a recognition both of the depth of the financial crisis and an attempt to balance its books Here are are with that crazy recognizing both clauses again.

(E) adjusting interest rates on mortgages held by individuals both recognize the depth of the financial crisis and an attempt to balance its books Whats recognizing and whos balancing? is it the individuals? the banks?
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Official Explanation :

The main verb of this sentence is is and its subject is adjustment. Since both adjustment and is are singular, they are in agreement, and this sentence is correct as written.

Choice (B) incorrectly changes the verb from is to recognize and attempt.

Choice (C) uses an improper idiom pairing both with as well as instead of and.

Choice (D) changes the noun adjustment into a gerund adjusting and changes held by to to, thereby changes the meaning of the sentence.

Choice (E) changes adjustment to adjusting and changes the verb is to recognize and attempt. Choice (A) is the correct answer.
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A major investment bank's adjustment of interest rates on mortgages held by individuals is both a recognition of the depth of the financial crisis and an attempt to balance its books.

(A) adjustment of interest rates on mortgages held by individuals is both a recognition of the depth of the financial crisis and an attempt to balance its books --> correct

(B) adjustment of interest rates on mortgages held by individuals both recognize the depth of the finance crisis and attempt to balance their books --> singular subject "adjustment", plural verb "recognize"

(C) adjustment of interest rates on mortgages held by individuals is a recognition both of the depth of the financial crisis as well as an attempt to balance its books --> wrong idioms "both ... as well as ..."

(D) adjusting interest rates on mortgages to individuals is a recognition both of the depth of the financial crisis and an attempt to balance its books -->"both of ... and an attempt" not parallel

(E) adjusting interest rates on mortgages held by individuals both recognize the depth of the financial crisis and an attempt to balance its books -->"both recognize ... and an attempt" not parallel
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