It is often incorrectly assumed that investing in real estate is safer

Question

It is often incorrectly assumed that investing in real estate is safer than investing in other markets. Because all investments are based upon predictions of future events, a profit can never be guaranteed.

If the statements above are correct, they most strongly support which of the following?

If the statements above are correct, they most strongly support which of the following?

A. The price of a property can be affected by many factors including the political stability and economic situation of its surrounding area.

B. The real estate market behaves like any other with respect to predicting gains or losses for any given investment.

C. Because property is a physical entity, it is always sold at a price higher than that at which it was bought.

D. Investing in the real estate market is complex and risky, and should be avoided at all costs.

E. To ensure a profit in the real estate market, experienced investors build models of future circumstances.

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VivekSri · Answer

OA is B

Two imp things that is discussed here.

1) Investing in real estate is not safer than investing in other market.
2) Investment is based on prediction of future event (kindly note here it is discussed for all the investment not solely on real estate) ,
so, a profit can never be guaranteed.

Option Elimination:

If the statements above are correct, they most strongly support which of the following?

A. The price of a property can be affected by many factors including the political stability and economic situation of its surrounding area. ->   This option is tricky as it is saying price of property can be effected on various factors, but in the argument, it is said about all the investment. Also, it is not focusing on the one more argument that real estate and investment in market is both are almost same in terms of safety. so, we can eliminate this.

B. The real estate market behaves like any other with respect to predicting gains or losses for any given investment. ->   So here it is discussed both the point. This is our answer.

C. Because property is a physical entity, it is always sold at a price higher than that at which it was bought. ->  Opposite the argument. So wrong

D. Investing in the real estate market is complex and risky, and should be avoided at all costs. ->  It is not saying this, No where it is said that we should avoid.
 
E. To ensure a profit in the real estate market, experienced investors build models of future circumstances. ->  Out of scope. Wrong

LamboWalker · Answer

The passage says that it is no form of investing is 'safe', and profits are not guaranteed in any form of investment.

A. The price of a property can be affected by many factors including the political stability and economic situation of its surrounding area. 
This is talking about the 'price' of a property, whereas the talk in the passage of profits. Hence, eliminated.

B. The real estate market behaves like any other with respect to predicting gains or losses for any given investment.  
Correct answer. According to author, any form of investment is equally unpredictable.

C. Because property is a physical entity, it is always sold at a price higher than that at which it was bought. 
This is opposite to what the author is trying to say.

D. Investing in the real estate market is complex and risky, and should be avoided at all costs. 
Out of scope.

E. To ensure a profit in the real estate market, experienced investors build models of future circumstances. 
Out of scope.

Bunuel · Answer

OFFICIAL EXPLANATION

It is often incorrectly assumed that investing in real estate is safer than investing in other markets. Because all investments are based upon predictions of future events, a profit can never be guaranteed.

If the statements above are correct, they most strongly support which of the following?

If the statements above are correct, they most strongly support which of the following?

A. The price of a property can be affected by many factors including the political stability and economic situation of its surrounding area.

Incorrect.

This is an Inference question, so the argument is comprised of premises only, on which basis you are asked to draw a conclusion:

Premise A: Investing in real estate is not safer than investing in other markets.
 +
Premise B: Investment decisions in all markets are based upon predicting what might, or might not, happen in the future. Since no one can see into the future, profits from investments are never a sure thing.
 =
Conclusion: ?

The argument does not mention anything about factors affecting the price of a property. You cannot reach the specific conclusion that the price of property is affected by political stability and economic situation ONLY from the statements above. It is possible that you are bringing outside information to bear on this problem, a classic error in inference questions. This answer choice presents new information that resembles an additional premise. Unfortunately, you should be looking for a conclusion based upon the current premises.

B. The real estate market behaves like any other with respect to predicting gains or losses for any given investment.

In premise B, the real estate market is included in a group with all investment types with respect to predicting a profit (or a loss). This answer choice, therefore, provides a logical conclusion to the argument.

C. Because property is a physical entity, it is always sold at a price higher than that at which it was bought.

Incorrect.

This is an Inference question, so the argument is comprised of premises only, on which basis you are asked to draw a conclusion:

Premise A: Investing in real estate is not safer than investing in other markets.
 +
Premise B: Investment decisions in all markets are based upon predicting what might, or might not, happen in the future. Since no one can see into the future, profits from investments are never a sure thing.
 =
Conclusion: ?

The phrase sold at a price higher than that at which it was bought is another way of saying profit. This answer choice, therefore, contradicts the premises by saying that investing in real estate always leads to profit.

D. Investing in the real estate market is complex and risky, and should be avoided at all costs.

Incorrect.

This answer choice makes an illogical leap from the premises given. Although the argument tells us that real estate investments are not a sure way to make a profit, it does not completely reject them.

E. To ensure a profit in the real estate market, experienced investors build models of future circumstances.

Incorrect.

To ensure a profit is another way of saying guarantee. In premise B we are told that, like with any investment, profits in the real estate market cannot be considered a sure thing.

It is often incorrectly assumed that investing in real estate is safer

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It is often incorrectly assumed that investing in real estate is safer

Prep Toolkit

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

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My Rewards