Every time a business grants financial credit to an

Question

Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual’s financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer’s right to privacy. If, however, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people. This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended.

In the passage above, the author assumes which of the following?

A] It is difficult to quantify the risk involved in any single decision to grant credit. 
B] Without the service provided by credit bureaus, businesses would have no factual basis for making credit decisions. 
C] The financial data that credit bureaus supply to businesses is generally accurate. 
D] It is difficult to reduce the complexities of an individual’s financial history to a computerized record. 
E] Consumers, in general, tend to seek more credit than they can safely assume.

sudhir18n · Answer

I think its C.
Negate the option 
The financial data that credit bureaus supply to businesses is generally NOT accurate. This will surely make the conclusion (This way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended) fall.

yogesh1984 · Answer

So best possible choice is C

LifeChanger · Answer

One of the classic questions in which the answer is generally the option that states the data to be accurate
Chose C without much fuss

Phoenix72 · Answer

IMO-C

Initially i was a bit confused between C & E but it clear that the ans is C.

siddharthmuzumdar · Answer

Nice question. Long argument took up a lot of time. But C is the correct answer. Negating C makes the conclusion fall apart.

dentobizz · Answer

Bumping for review and further discussion*.
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Theory on Assumption Questions
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https://www.manhattangmat.com/blog/inde ... #more-6587
https://www.manhattangmat.com/articles/CR-assumption.cfm
Grockit
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Thoughtosphere · Answer

Don't think that this is a 700 question. No struggle in cruising to the answer choice

C

Ella02 · Answer

C question was ok. But it is difficult to answer under 2 min

2016MBAcandidate · Answer

Took 3:25 to mark C

Ruled out A,D and E,and was confused between B and C
applied negation technique on both B and C. negating C weaken the conclusion.
So marked c.

mvictor · Answer

if you negate C, the whole argument goes down. so definitely C is the answer.

devikeerthansr · Answer

Between B and C. I chose C because negating it completely destroys the argument.

coreyander · Answer

OFFICIAL EXPLANATION: 
  
 Conclusion:  This way   credit bureaus can prevent the foolhardy consumer from becoming seriously overextended.
 
Premise:  Every time a business grants financial credit to an individual, the business assumes risk. In order to evaluate the risk, a business must have correct information about that individual's financial history. It is true that credit bureaus, which compile such information from computerized records, have been accused of invading the consumer's right to privacy. If, only limited restrictions are placed on the availability of such information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people.

Assumptions:  There are no problems with the plan. Placing limited restrictions on the availability of credit information to businesses, will allow those businesses to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people, thus preventing the foolhardy consumer from becoming seriously overextended.

The question stem asks the author assumes which of the following, so this is an assumption question. The argument uses a planning reasoning pattern. This can be identified by recognizing that the passage says this way credit bureaus can, in fact, prevent the foolhardy consumer from becoming seriously overextended to reference the proposed plan stating that if, only limited restrictions are placed on the availability of (credit) information to businesses, those businesses will be able to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people.

The standard assumption of a planning reasoning pattern is that there are no problems with the plan. Because this is an assumption question, the correct answer will provide a reason that the plan will work. Evaluate the answer choices.

Choice A: No. The phrase It is difficult to quantify the risk involved in any single decision to grant credit is extreme language. If it were true, then the plan would not work. If the credit information provided to businesses did not quantify the credit risk, the credit information would not allow those businesses to reduce their overall exposure to risk by giving credit only to people with good credit ratings while at the same time extending larger amounts of credit to more people.

Choice B: No. The phrase no factual basis for making credit decisions is extreme language that is not supported by the passage and is not an assumption of the argument.

Choice C: Correct. This choice is supported by the argument. The plan would work if The financial data that credit bureaus supply to businesses is generally accurate. Use the negation test to evaluate the assumption. If The financial data that credit bureaus supply to businesses weren’t generally accurate, then the argument would no longer be valid because it would not be possible to guarantee that businesses were giving credit only to people with good credit ratings.

Choice D: No. This choice is out of scope. The difficulty of reducing the complexities of an individual's financial history to a computerized record, is not pertinent to the plan to place only limited restrictions on the availability of information about an individual’s financial history to businesses.

Choice E: No. The phrase Consumers, in general, tend to seek more credit than they can safely assume is extreme language. The passage does not imply that consumers in general seek more credit than they can safely assume. It indicates that the plan is intended to prevent the foolhardy consumer from becoming seriously overextended.

The correct answer is choice C.

Tea12 · Answer

Those having confusion about choice E.
 choice E: Consumers, in general, tend to seek more credit than they can safely assume.

The objective of argument is to give credit only to people with good credit ratings , however choice E says about "varying the amount of credit to consumers". Thus, it is out of scope and hence incorrect.

Every time a business grants financial credit to an

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Every time a business grants financial credit to an

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