Hedge Fund managers who have invested in the sub-prime mortgage market

Question

Hedge Fund managers who have invested in the sub-prime mortgage markets have cited the ongoing economic crisis as reason for delivering lower than expected returns. It is indeed true that the economic crisis has had an adverse impact on regular equity investors,  but in the case of hedge funds, this excuse is clearly not acceptable . Hedge funds are intrinsically designed to protect against market uncertainties, and  therefore, should have provided sufficient cover against the economic crisis . Rather, it is lack of prudent investing that is to blame.

In the argument given, the two boldfaced portions play which of the following roles?

A. The first provides evidence to support the conclusion of the argument as a whole; the second states the conclusion.

B. The first states the conclusion of the argument as a whole; the second states an intermediate conclusion that is drawn in order to support that conclusion.

C. The first is the position that the argument as a whole opposes; the second provides evidence against the position being opposed.

D. The first states an intermediate conclusion that is drawn in order to support the conclusion of the argument as a whole; the second states the conclusion of the argument as a whole.

E. The first and second both state intermediate conclusions that are drawn in order to support jointly the conclusions of the argument as a whole.

tuanquang269 · Answer

The second is definitely the conclusion and. So, we can eliminate choice E, C, B.

Between D and A. Choice D states that the first is the intermediate conclusion that is drawn in order to support the main conclusion. It's wrong because we can use the "therefore" technique after cut over the after-part of the first boldface, we do not have any feelings or logical reasoning for the second to be sub-conclusion.

POE, choice A is the clear correct answer.

gnan · Answer

Though I am weak in verbal section, I strongly feel that B is the right answer. Here's the explanation.

Premise-1 : Hedge funds are intrinsically designed to protect against market uncertainties

Intermediate conclusion / Premise-2 : therefore, should have provided sufficient cover against the economic crisis

Final conclusion : but in the case of hedge funds, this excuse is clearly not acceptable

The first two statements are counter premises which is followed by conclusion. The word 'but' indicates that the conclusion is not derived from he first two statements. And then premise-1 and premise-2 are stated to support the conclusion.

PS: Kindly explain if I got it all wrong.

mourinhogmat1 · Answer

I was having problems with this one: So, I will explain my solution here.

Traditional view:  Hedge Fund managers who have invested in the sub-prime mortgage markets have cited the ongoing economic crisis as reason for delivering lower than expected returns.

Evidence for Traditional view:  It is indeed true that the economic crisis has had an adverse impact on regular equity investors,

New view:  but in the case of hedge funds, this excuse is clearly not acceptable.

Evidence for new view : Hedge funds are intrinsically designed to protect against market uncertainties, and therefore, should have provided sufficient cover against the economic crisis.

Evidence for new view:  Rather, it is lack of prudent investing that is to blame.

If you look at the answer choices, only B stands out as the correct choice. I believe Bold faced questions, I face two main problems: 1) Stop going deep into the argument itself, instead just focus on statements and treat them as premises rather than facts. 2) Don't look at the answer choices before you have a clear structure in mind.

Someone have the OA for this?

Aki · Answer

I also narrowed it down to A and D but chose D. Used the same "therefore" test. Let my voice it out: 1. X should have provided sufficient cover against the economic crisis. Therefore, excuse not acceptable. -----> Seems Legit 2. Excuse not acceptable. Therefore, X should have provided sufficient cover against the economic crisis -----> Nonsensical Therefore (

) , D seems correct to me. @tuanquang269 you seem to have used the same method and got a different answer. Can you please explain your answer ( Or better yet, help me understand what I missed )

Temurkhon · Answer

it is  E

Final conclusion is the last sentence:   it is lack of prudent investing

Both are intermediate conclusions

roopika2990 · Answer

I'd go for E ... both are intermediate conclusion to draw the main conclusion i.e. it is lack of prudent investing that is to blame.

VatsalKrishna · Answer

Main Conclusion that author is trying to convey - Hedge funds has not provided the expected returns.
The bold lines are the sub-conclusions that support the main conclusion.

I would have gone with E

redskull1 · Answer

I think B is correct.The first BF is definitely the main conclusion.By this we can remove the rest of the options.

Posted from my mobile device

Albs · Answer

I got E - what is the correct answer?

AceUp04 · Answer

What is the correct answer for this one?

AbhishekDhanraJ72 · Answer

Hedge Fund managers who have invested in the sub-prime mortgage markets have cited the ongoing economic crisis as reason for delivering lower than expected returns. It is indeed true that the economic crisis has had an adverse impact on regular equity investors,  but in the case of hedge funds, this excuse is clearly not acceptable . Hedge funds are intrinsically designed to protect against market uncertainties, and  therefore, should have provided sufficient cover against the economic crisis . Rather, it is lack of prudent investing that is to blame.

In the argument given, the two boldfaced portions play which of the following roles?

A. The first provides evidence to support the conclusion of the argument as a whole; the second states the conclusion.

B. The first states the conclusion of the argument as a whole; the second states an intermediate conclusion that is drawn in order to support that conclusion.

C. The first is the position that the argument as a whole opposes; the second provides evidence against the position being opposed.

D. The first states an intermediate conclusion that is drawn in order to support the conclusion of the argument as a whole; the second states the conclusion of the argument as a whole.

E. The first and second both state intermediate conclusions that are drawn in order to support jointly the conclusions of the argument as a whole.

answer please??????

jaisonsunny77 · Answer

The summary of the passage is as follows:

Lower than expected returns occurred. Hedge fund managers blame it on the economic downturn. The passage is then constructed to counter the hedge fund managers' reasoning.

Both the boldfaced statements are a part of the argument's effort in countering the hedge fund managers' reasoning. So, these boldfaced statements do not oppose each other in any way. The conclusion is always followed supported with a reason why the conclusion is true. With this key idea in mind, if we take a closer look at the two boldfaced statements, we get to see that the main conclusion actually lies in the first boldfaced statement ( main conclusion: this excuse is clearly not acceptable. )

What follows the first boldfaced statement is an explanation or reasoning why the main conclusion (mentioned in the first boldfaced statement) should be considered as true.

Hence, only (B) reflects this school of thought perfectly.

B. The first states the conclusion of the argument as a whole; the second states an intermediate conclusion that is drawn in order to support that conclusion.

Therefore,    (B) is the right answer choice

vmadan10 · Answer

Hello Experts, Could you please help provide the OA and maybe an OE for this question.

Thanks!

MentorTutoring ,  GMATNinja ,  CrackVerbalGMAT ,  nightblade354 ,  GMATNinjaTwo ,  egmat ,  MartyTargetTestPrep ,  DmitryFarber

AndrewN · Answer

All right, I will stick my neck out on this one. I will say, first of all, that the source appears to be  this article on CR  on MBA Crystal Ball. That post predates the one above on this forum by a few weeks.  No answer was provided  on the blog, so I cannot exactly deliver on providing the OA and OE. However, in the interest of assisting the community, I will offer my thoughts. If nothing else, we may be able to generate more dialogue on a tough question. Since this is a  boldface  question, we have to be careful not to read just the boldface portions and make a hasty determination. Instead, we need to read the passage as we would any other, looking to understand how each sentence builds off the ideas of another, and how the sentences we need to focus on relate to the passage on the whole. The passage, with the boldface removed:

Sentence 1 provides a claim. Hedge Fund managers point to  the ongoing economic crisis for delivering lower than expected returns .

Sentence 2 starts with a concession in  it is indeed true , but then the line takes a turn at, fittingly enough,  but . The author of the passage states that the reasoning of the Hedge Fund managers  is clearly not acceptable , since the same market conditions do not apply to regular equity investors and hedge fund investors.

Sentence 3 mentions the intrinsic design of hedge funds  to protect against market uncertainties , so this inherent failsafe  should have provided sufficient cover  against the undesirable outcome of  delivering lower than expected returns  (from line 1).

Sentence 4 provides a counter-explanation for the development: hedge fund managers, the ones who did the investing, did not invest cautiously enough.

The passage map is simple enough. What do the answer choices have in store, though?

I will be honest and say that I eliminated this answer choice immediately, as soon as I reached  evidence . If I say that a certain behavior is  unacceptable , then I am voicing my opinion, not providing evidence. Besides, in the passage, the  why  behind  this excuse is clearly not acceptable  comes in the lines that follow. In boldface questions, I like to see if I can clearly eliminate anything in a first pass, sometimes focusing on one boldface portion or the other (i.e. not focusing on both at the same time).  Evidence  here is a clear red light.

I have zero reservations here about the role of the second boldface portion. Why is the excuse of the Hedge Fund managers unacceptable? Because of the intrinsic design of hedge funds. The conclusion marker  therefore  could just as easily be a  so  (with an appropriate altering of the punctuation). Moreover, this intermediate conclusion that the inherent design of hedge funds should have prevented diminished returns supports the earlier statement that the excuse of the Hedge Fund managers  is clearly not acceptable . The only question I have is whether that earlier conclusion is   the  conclusion of the argument as a whole . I would feel more comfortable if the last sentence of the passage were stitched together with the line that contains the first boldface portion, as in,

It is indeed true that the economic crisis has had an adverse impact on regular equity investors, but in the case of hedge funds, this excuse is clearly not acceptable; rather, it is lack of prudent investing that is to blame.

This is to say that the final line of the passage relates unequivocally to the first boldface portion, as if the thought were broken up across a few lines. In this altered version, would you feel comfortable stating that  this excuse is clearly not acceptable  is the main conclusion over  it is lack of prudent investing that is to blame ? I would  yellow-light  this answer for now and assess the others.

Again, I did not make it past the first part here. The argument is  built from  the first boldface portion, so to say that it represents  the position that the argument... opposes  is the opposite of what we are looking for. After (B), this is a welcome option. Keep moving.

In this case, the second part is easier to disqualify, in my mind, than the first. I would call this a trap answer for the test-taker who immediately assumes that the presence of  therefore  toward the end of a passage must mean that whatever follows is the main conclusion. But we cannot ignore the fact that the entire line, sentence 3, serves to qualify the statement made just before, in sentence 2, that  this excuse is clearly not acceptable . If sentence 3 provides an answer for  How so? , then it cannot be seen as the main conclusion, but as support for some other conclusion instead.

I cannot deny that the first and second both state conclusions, but whether the first is an  intermediate  conclusion is debatable, in light of the last line of the passage. I am also uncomfortable with the plurality of  conclusions  in the latter part of the answer choice. I know it sounds as if I might be making a big deal out of nothing, but if it said  conclusion , I would have a harder time going against it. The original question does, in fact, say  conclusions , so supposing that the  s  belongs there at the end, we have to ask ourselves, what are these  other  conclusion s  that the argument puts forth? If we remove the boldface conclusions, we are left with the following:

I can support the notion that the line beginning with  rather  is a conclusion, but if you want to point to anything else and call it such, I will be dumbfounded. In my mind, there is no room for a second conclusion in the non-boldfaced portion of the passage. This answer choice says  conclusions . I cannot find  them  with the boldface portions removed.

Between (B) and (E), for the reasons I have outlined above,  I would choose (B) as the answer . I hope that helps the community. I would love to hear other Experts weigh in. At any rate, the question helps us pause for a moment and really consider  exactly  what the passage and answer choices are saying, and that should prove fruitful in your CR studies.

- Andrew

A_Nishith · Answer

Argument Analysis:

First Boldface Statement:  “It is indeed true that the economic crisis has had an adverse impact on regular equity investors...”
This statement acknowledges a fact and appears to be an intermediate conclusion, recognizing a point that the argument builds upon, but it’s not the main conclusion of the argument.
 
Second Boldface Statement:  “Rather, it is lack of prudent investing that is to blame.”
This is the main conclusion of the argument, where the author asserts that the poor performance of hedge funds is due to lack of prudent investing, not the economic crisis.

Roles:

The first boldface statement acts as an intermediate conclusion because it supports the author’s setup that while the economic crisis impacted regular investors, hedge funds shouldn’t use this as an excuse.

The second boldface statement is the main conclusion of the argument.

Revised Answer Analysis:

B: The first boldface statement is an intermediate conclusion (it acknowledges a fact about the economic crisis and regular investors). The second boldface statement is the main conclusion (blaming poor investing, not the economic crisis, for hedge fund performance).
This is the correct interpretation based on the argument structure.

Thus, the correct answer is B.

Hedge Fund managers who have invested in the sub-prime mortgage market

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Hedge Fund managers who have invested in the sub-prime mortgage market

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards