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29 Nov 2007, 05:38
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Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
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Ella: The house on Elm Street is a smart investment and we should buy it immediately. The real estate market is volatile, and since current prices are relatively low, we should take advantage of the owner’s financial trouble and make a low offer today.
Cindy: We should rent a house while we save enough money for a big down payment. If we don’t put enough money down, our mortgage payments will be too high.
Which of the following, if true, would offer the most support for Ella’s argument in light of Cindy’s criticism?
a) A big down payment does not protect against rising interest rates.
b) The risk of making an immediate offer is small if current prices are relatively low.
c) Some investors in volatile real estate markets have made enormous profits by timing wisely the resale of their investments.
d) Investing in real estate when prices are low outweighs any advantage gained by having a comparatively low mortgage payment.
e) If the owner’s financial trouble caused the price of the house to drop below market value, the investment would almost certainly bring a profit
Please provide an explanation
Cindy: We should rent a house while we save enough money for a big down payment. If we don’t put enough money down, our mortgage payments will be too high.
Which of the following, if true, would offer the most support for Ella’s argument in light of Cindy’s criticism?
a) A big down payment does not protect against rising interest rates.
b) The risk of making an immediate offer is small if current prices are relatively low.
c) Some investors in volatile real estate markets have made enormous profits by timing wisely the resale of their investments.
d) Investing in real estate when prices are low outweighs any advantage gained by having a comparatively low mortgage payment.
e) If the owner’s financial trouble caused the price of the house to drop below market value, the investment would almost certainly bring a profit
Please provide an explanation
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29 Nov 2007, 06:14
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Ella's argument: Buy now while prices are low
Cindy: Wait to have lower repayments
a) A big down payment does not protect against rising interest rates.
Nothing to do with Ella's argument
b) The risk of making an immediate offer is small if current prices are relatively low.
Nothing to do with Cindy's counter argument
c) Some investors in volatile real estate markets have made enormous profits by timing wisely the resale of their investments.
Resale has nothing to do with either statement
d) Investing in real estate when prices are low outweighs any advantage gained by having a comparatively low mortgage payment.
This looks good - it addresses both Ella's comment and the counter-argument
e) If the owner’s financial trouble caused the price of the house to drop below market value, the investment would almost certainly bring a profit
Resale has nothing to do with either statement
Answer: D
Cindy: Wait to have lower repayments
a) A big down payment does not protect against rising interest rates.
Nothing to do with Ella's argument
b) The risk of making an immediate offer is small if current prices are relatively low.
Nothing to do with Cindy's counter argument
c) Some investors in volatile real estate markets have made enormous profits by timing wisely the resale of their investments.
Resale has nothing to do with either statement
d) Investing in real estate when prices are low outweighs any advantage gained by having a comparatively low mortgage payment.
This looks good - it addresses both Ella's comment and the counter-argument
e) If the owner’s financial trouble caused the price of the house to drop below market value, the investment would almost certainly bring a profit
Resale has nothing to do with either statement
Answer: D
29 Nov 2007, 07:11
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OA is D
Archived Topic
Hi there,
This topic has been closed and archived due to inactivity or violation of community quality standards. No more replies are possible here.
Where to now? Join ongoing discussions on thousands of quality questions in our Critical Reasoning (CR) Forum
Still interested in this question? Check out the "Best Topics" block above for a better discussion on this exact question, as well as several more related questions.
Thank you for understanding, and happy exploring!
