Summer is Coming! Join the Game of Timers Competition to Win Epic Prizes. Registration is Open. Game starts Mon July 1st.

 It is currently 20 Jul 2019, 18:02

### GMAT Club Daily Prep

#### Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.

Customized
for You

we will pick new questions that match your level based on your Timer History

Track

every week, we’ll send you an estimated GMAT score based on your performance

Practice
Pays

we will pick new questions that match your level based on your Timer History

# When the rate of inflation exceeds the rate of return on the most

Author Message
TAGS:

### Hide Tags

Senior Manager
Affiliations: ACA, CPA
Joined: 26 Apr 2009
Posts: 381
Location: Vagabond
Schools: BC
WE 1: Big4, Audit
WE 2: Banking
When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

Updated on: 06 Oct 2017, 03:28
3
7
00:00

Difficulty:

95% (hard)

Question Stats:

40% (01:58) correct 60% (02:09) wrong based on 316 sessions

### HideShow timer Statistics

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

Which one of the following 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 available

Source : LSAT

_________________
If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.

Originally posted by snipertrader on 04 Oct 2009, 03:47.
Last edited by broall on 06 Oct 2017, 03:28, edited 1 time in total.
Director
Joined: 01 Apr 2008
Posts: 723
Name: Ronak Amin
Schools: IIM Lucknow (IPMX) - Class of 2014
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

04 Oct 2009, 09:18
Source : LSAT

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 available

Looks like C to me. A and D can be true, but they are not MUST.
If the decline is more than the formula that is given, then the investment in question is other than the most profitable one, because for the most profitable investment the decline will me minimum.
Senior Manager
Affiliations: ACA, CPA
Joined: 26 Apr 2009
Posts: 381
Location: Vagabond
Schools: BC
WE 1: Big4, Audit
WE 2: Banking
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

04 Oct 2009, 09:29
1
OA is C

This is how i approached the problem. I was looking for an external factor that would have caused the effect mentioned. (decline in the value of Investment)

A) the rate of inflation has risen - Already given in the stem

B) the investment in question is becoming less profitable - Out of scope

C) the investment in question is less profitable than the most profitable investment available - Contender

D) the rate of return on the most profitable investment available has declined - Already given in the stem

E) there has been a change in which particular investment happens to be the most profitable available - Contender

Was stuck between C and E.
_________________
If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.
Intern
Joined: 30 Sep 2009
Posts: 33
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

04 Oct 2009, 09:39
It should not be E....
I too got really confused and took some time to get it right between C and E.
A minor conclusion that can also be drawn from the stimuli is that, if somebody, invests in an instrument other than the most profitable investment, he is bound to get a higher negative return....
This excludes option E.
Senior Manager
Affiliations: ACA, CPA
Joined: 26 Apr 2009
Posts: 381
Location: Vagabond
Schools: BC
WE 1: Big4, Audit
WE 2: Banking
When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

04 Oct 2009, 21:37
B and C are in a way similar but B is very vague. (becoming less profitable).
The argument is based on two aspects - Rate of inflation & most profitable investment.

When in doubt... i always try to rally around the key words given in the stem.
Hope this helps.
_________________
If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.
Intern
Joined: 16 Aug 2009
Posts: 3
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

08 Oct 2009, 22:13
Its C.

The questions says that

P (loss) = Inflation percent - profit on most profitable investment

If a particular investment got a greater loss then it means that its not as profitable as most profitbale

To explain in numbers
Inflation percent be 5%
Profit on most profitable be 3%

so the real value of investment should 105 but is only 103 and p is 2%

so if a particular investment has loss greater p that means that it is less profitable since the inflations stays the same for all investments......
Intern
Joined: 25 Jul 2009
Posts: 21
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

09 Oct 2009, 04:47
This one is real toughie between B and C
B says the businesss is less proffitable which is correct. To make the investment go below the minimum percentage either the cost or the revenue has to decrease. Either way both will result in the profitibility of the business.

C is also kind of correct. Had it been 'the investment in question is less profitable than the most profitable investment available theortically' it would have made more sense because practically it might happen that all businesses have failed to at much deeper level than the business at hand.
So the business we are talking about perhaps becomes the most proffitable of all.
Manager
Joined: 16 Jul 2009
Posts: 191
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

09 Oct 2009, 08:38
Was stuck between B and C.. Thanks sniper your POE is really helpful to arrive at the right answer..
Director
Joined: 25 Aug 2007
Posts: 714
WE 1: 3.5 yrs IT
WE 2: 2.5 yrs Retail chain
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

10 May 2010, 07:15
We can't bring new info to the argument. So, only A and C left.

Confused b/w A and C, as it is given that when the rate of inflation exceeds (not has exceeded - crucial point). Due to this I marked A.

It is my fault no to read the argument carefully that we are given two types of investments: most profitable and any.

_________________
Intern
Joined: 04 Feb 2010
Posts: 8
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

10 May 2010, 15:45
manojgmat wrote:
I chose B, why B cannot be answer?

There are TWO investments posited in the question. The first is "the most profitable investment". The second is "a particular investment". The second is also the investment under investigation.

B cannot be the answer because B assumes that the "particular investment" IS "the most profitable investment", but nothing in the question explicitly states that they are the same.
Manager
Joined: 21 Jan 2010
Posts: 142
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

11 May 2010, 10:13
Xisiqomelir wrote:
manojgmat wrote:
I chose B, why B cannot be answer?

There are TWO investments posited in the question. The first is "the most profitable investment". The second is "a particular investment". The second is also the investment under investigation.

B cannot be the answer because B assumes that the "particular investment" IS "the most profitable investment", but nothing in the question explicitly states that they are the same.

Also, B cannot be right because a particular investment can become more profitable but still decline more than "that percentage", which is the difference between inflation rate the the ROI of the MOST profitable investment.
Senior Manager
Joined: 21 Dec 2010
Posts: 404
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

06 May 2011, 13:31
'B cannot be the answer because B assumes that the "particular investment" IS "the most profitable investment", but nothing in the question explicitly states that they are the same'

good explanation this , i came to C in 1:59 min .
Senior Manager
Joined: 21 Dec 2010
Posts: 404
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

06 May 2011, 13:35
1
@ calvinhobbes , i don't understand how this is possible

''Also, B cannot be right because a particular investment can become more profitable but still decline more than "that percentage", which is the difference between inflation rate and the ROI of the MOST profitable investment''
Manager
Joined: 16 Mar 2011
Posts: 158
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

06 May 2011, 14:22
the stem says "When the rate of inflation exceeds the rate of return on the most profitable investment available, the difference between those two rates will be the percentage by which, at a minimum, the value of any investment will decline. If in such a circumstance the value of a particular investment declines by more than that percentage, it must be true that:

the most important phrase in the stem is "most profitable", the base of the %term in question is the comparison b/w inflation and the most profitable. so anything that is more than this % have to be compared to the "most profitable".

C is the only choice providing the specific base of comparison "most profitable",
Director
Status: There is always something new !!
Affiliations: PMI,QAI Global,eXampleCG
Joined: 08 May 2009
Posts: 950
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

16 May 2011, 03:55
Most profitable investment will have a profitability decline %.
if the profitability decline % is more for the investment in question,its obvious that the profitability of the investment will be lesser than the most profitable investment.

Hence C comes out clean in this.
Manager
Joined: 14 Apr 2011
Posts: 165
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

13 Jul 2011, 10:02
was stuck between B and C. felt inclined to choose C but picked B as it seemed correct.

ruled out E as it seems out of scope/unclear as the "change": whatever that is - it is not mentioned.
_________________
Looking for Kudos
Non-Human User
Joined: 01 Oct 2013
Posts: 4816
Re: When the rate of inflation exceeds the rate of return on the most  [#permalink]

### Show Tags

21 Aug 2018, 06:28
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
_________________
Re: When the rate of inflation exceeds the rate of return on the most   [#permalink] 21 Aug 2018, 06:28
Display posts from previous: Sort by