Since it has become known that several of a banks top executives

Question

Since it has become known that several of a bank’s top executives have been buying shares in their own bank, the bank’s depositors, who had been worried by rumors that the bank faced impending financial collapse, have been greatly relieved. They reason that since top executives evidently have faith in the bank’s financial soundness, those worrisome rumors must be false. The depositors might well be over-optimistic, however, since corporate executives have been known to buy shares in their own company in a calculated attempt to dispel negative rumors about the company’s health.

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

A. The first describes evidence used in the reasoning that the argument calls into question; the second gives information about the source of that evidence.

B. The first describes evidence used in the reasoning that the argument calls into question; the second states the conclusion of the argument as a whole.

C. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second is evidence that undermines the support for this intermediate conclusion.

D. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second states the conclusion of the argument as a whole.

E. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second states a further conclusion supported by this intermediate conclusion.

Gmat860sanskar · Answer

OFFICIAL EXPLANATION

Argument Construction

Situation
A bank’s depositors are concerned that the bank may be failing but are reassured to learn that the bank’s executives are buying shares in the bank. The depositors believe that these purchases show that the bank must be sound. The argument calls their belief into question by stating that executives sometimes purchase stocks in their own company merely to create the appearance of corporate health.

Reasoning
What role do the two boldfaced portions play in the argument that the bank’s depositors may have been misled into believing the bank is sound? The first portion states an intermediate conclusion drawn by the depositors: that “evidently” the bank’s executives believe the bank is sound, as demonstrated by their stock purchases. The argument, however, describes this reasoning as overly optimistic. The second portion offers evidence that undermines the support for the intermediate conclusion: executives may not necessarily buy stock out of faith in their company, but rather to create a misleading public impression of such faith.

A. The first portion does describe evidence used in the reasoning that the argument calls into question, namely that the stock purchases by executives demonstrate their faith in the company; however, the second portion is opposing evidence, not information regarding the source of the earlier evidence.

B. The first portion does describe evidence supporting a belief that the argument views as misguided, namely the belief that rumors the bank is collapsing must be false; however, the second portion is not the overall conclusion, but support for that conclusion: that the depositors may be mistaken in believing the bank is sound after all.

C.  Correct. The first portion describes the intermediate conclusion drawn by the depositors: the executives clearly believe the bank is healthy. The argument immediately calls this conclusion into question by calling it overly optimistic, then, in the second portion, offers evidence against the support used by the depositors in drawing their hopeful conclusion: executives’ stock purchases may derive not from genuine faith in their company, but rather from a desire to create the illusion of such faith.

D. The first portion does describe the intermediate conclusion drawn by the depositors, namely that the executives have faith in the bank’s health; however, the second portion is not the overall conclusion but support for that conclusion: that the depositors may be overly optimistic in taking the executives’ purchases as reassurance.

E. The first portion does describe the intermediate conclusion drawn by the depositors, namely that the executives have faith in the bank’s health; the second portion, however, is evidence against that intermediate conclusion, not a further conclusion it supports.

Bunuel · Answer

Similar questions: https://gmatclub.com/forum/since-it-has ... 45241.html (GMAT Prep Classic mockd) https://gmatclub.com/forum/since-it-has ... 36001.html (older OG's)

guddo · Answer

Since it has become known that several of a bank’s top executives have been buying shares in their own bank, the bank’s depositors, who had been worried by rumors that the bank faced impending financial collapse, have been greatly relieved. They reason that since top executives evidently have faith in the bank’s financial soundness, those worrisome rumors must be false. The depositors might well be over-optimistic, however, since corporate executives have been known to buy shares in their own company in a calculated attempt to dispel negative rumors about the company’s health.
 
 In the argument given, the two boldfaced portions play which of the following roles?

The depositors reason from the executives’ stock purchases to the idea that the executives have faith in the bank, and then to the conclusion that the rumors are false. The author challenges this reasoning by giving another possible explanation for the purchases.  So the first boldface is an intermediate conclusion , and the second is evidence that weakens the support for that  intermediate conclusion .

A. The first describes evidence used in the reasoning that the argument calls into question; the second gives information about the source of that evidence.

This is incorrect. The first boldface is not direct evidence; it is a conclusion drawn from the executives’ purchases.

B. The first describes evidence used in the reasoning that the argument calls into question; the second states the conclusion of the argument as a whole.

This is incorrect. The second boldface is not the main conclusion. The main conclusion is that the depositors may be over-optimistic.

C. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second is evidence that undermines the support for this intermediate conclusion.

This is correct. The first boldface is inferred from the executives’ buying shares. The second shows that such buying may be done to dispel rumors, not because executives truly believe the bank is financially sound.

D. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second states the conclusion of the argument as a whole.

This is partly right about the first boldface, but wrong about the second. The second supports the author’s conclusion; it is not the conclusion itself.

E. The first is an intermediate conclusion that forms part of the reasoning that the argument calls into question; the second states a further conclusion supported by this intermediate conclusion.

This is incorrect. The second does not follow from the first. It is used against the reasoning that relies on the first.

Answer: (C)

Since it has become known that several of a banks top executives

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Since it has become known that several of a banks top executives

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