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# when the rate of inflation exceeds the rate of return on the

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CEO
Joined: 15 Aug 2003
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when the rate of inflation exceeds the rate of return on the [#permalink]

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05 Oct 2003, 00:39
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when the rate of inflation exceeds the rate of return on the most profitable investment available , the difference between the two rates will be the percentage, by which,at a minimum, the value of any investment will decline. If in such circumstance the value of a particular investment declines by more than that percentage, it must be true that ................

Which one logically completes the argument?

A. The rate of inflation has risen

B. The investment in question is becoming less profitable

C. The investment in question is less profitable than the most profitable investment available

D. The rate of return on the most profitable investment available has declined

E. There has been a change in which particular investment happens to be the most profitable

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Manager
Joined: 13 Aug 2003
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05 Oct 2003, 01:51
I would feel C is fine. A tough one but c is most logical as it says that the decline is more in investments which arent the most profitable. let me know the right answer and the reasons

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CEO
Joined: 15 Aug 2003
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Kudos [?]: 928 [0], given: 781

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05 Oct 2003, 12:33
ngulati wrote:
I would feel C is fine. A tough one but c is most logical as it says that the decline is more in investments which arent the most profitable. let me know the right answer and the reasons

C is correct !

help me out with a question.

This is what i paraphrased:

The argument says that the " percentage change on the most profitable investment " is the MINIMUM percentage...so even if the percentage changes , it is still the most profitable investment..
In short, the percentage change does not matter..It can be the most profitable investment.
Thats why i selected B. why is B wrong?

thanks
praetorian

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Intern
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Re: CR : Rate of Inflation [#permalink]

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05 Oct 2003, 17:10
The statement begins setting a standard: if the most profitable investment (i.e. 10%) is below the rate of inflation (i.e. 15%), any investment will decline by at least 5%, so, if the value of any investment is below this 5%, the investment is less profitable than the best one.
We're talking about constant rates. Moreover, you don't have any information suggesting that this particular investment ever had the most profitable rate.

C should be correct.

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Re: CR : Rate of Inflation   [#permalink] 05 Oct 2003, 17:10
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# when the rate of inflation exceeds the rate of return on the

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