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# Which of the following best completes the passage below? As

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Manager
Joined: 08 Aug 2008
Posts: 226
Which of the following best completes the passage below? As  [#permalink]

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18 Nov 2008, 02:13
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16. Which of the following best completes the passage below?

As long as savings deposits are insured by the government, depositors will have no incentive to evaluate the financial strength of a savings bank. Yield alone will influence their choice of bank. To attract deposits, banks will be forced to offer the highest possible interest rates. And since paying higher rates inevitably strains the financial strength of a bank, ______

(A) the government will be forced o impose limitations on interest rates
(B) deposit insurance will ultimately lead to the financial weakening of many banks
(C) savers will be forced to choose between deposit insurance and higher interest rates
(D) deposits will tend to go to the banks with the greatest financial strength
(E) bank profits will tend to rise to ever-higher levels

aint sure which way the author's poistion is moving in the argument....

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Intern
Joined: 14 Oct 2008
Posts: 29
Re: CR: Gmat verbal Sets  [#permalink]

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18 Nov 2008, 02:27
I'll go with B

but not very clear what argument wants to position

What's the OA?
Manager
Joined: 12 Jun 2008
Posts: 58
Re: CR: Gmat verbal Sets  [#permalink]

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18 Nov 2008, 02:32
IMO A
VP
Joined: 05 Jul 2008
Posts: 1329
Re: CR: Gmat verbal Sets  [#permalink]

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18 Nov 2008, 15:58
prasun84 wrote:
16. Which of the following best completes the passage below?

As long as savings deposits are insured by the government, depositors will have no incentive to evaluate the financial strength of a savings bank. Yield alone will influence their choice of bank. To attract deposits, banks will be forced to offer the highest possible interest rates. And since paying higher rates inevitably strains the financial strength of a bank, ______

(A) the government will be forced o impose limitations on interest rates
(B) deposit insurance will ultimately lead to the financial weakening of many banks
(C) savers will be forced to choose between deposit insurance and higher interest rates
(D) deposits will tend to go to the banks with the greatest financial strength
(E) bank profits will tend to rise to ever-higher levels

aint sure which way the author's poistion is moving in the argument....

IMO B.

This Q reminded me of the sentence completion from GRE, which I took about 10 years ago. Any way here is my 2 cents. look at the sentence that needs to be filled and imagine what would logically follow.

And since paying higher rates inevitably strains the financial strength of a bank

If some one is paying higher interest rate for the money he/she borrowed, what will happen?

they will go bankrupt soon as principal stays the same and interest gets compounded if they don't pay whole interest every term. As the banks are under stress, they will NOT make money. If you look at the root cause its the depositors insurance that lead to the chain of events.

DI -> lack of incentive to verify bank's strength = only care about yield -> more stress on bank to get customers -> offer HI's -> increases banks' financial stress -> results in failure/difficult situations for banks

Hence B
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Re: CR: Gmat verbal Sets  [#permalink]

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18 Nov 2008, 16:03
B for me too...
Manager
Joined: 08 Aug 2008
Posts: 226
Re: CR: Gmat verbal Sets  [#permalink]

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18 Nov 2008, 22:17
+1 for that...
i was torn between A and B..
icandy wrote:
prasun84 wrote:
16. Which of the following best completes the passage below?

As long as savings deposits are insured by the government, depositors will have no incentive to evaluate the financial strength of a savings bank. Yield alone will influence their choice of bank. To attract deposits, banks will be forced to offer the highest possible interest rates. And since paying higher rates inevitably strains the financial strength of a bank, ______

(A) the government will be forced o impose limitations on interest rates
(B) deposit insurance will ultimately lead to the financial weakening of many banks
(C) savers will be forced to choose between deposit insurance and higher interest rates
(D) deposits will tend to go to the banks with the greatest financial strength
(E) bank profits will tend to rise to ever-higher levels

aint sure which way the author's poistion is moving in the argument....

IMO B.

This Q reminded me of the sentence completion from GRE, which I took about 10 years ago. Any way here is my 2 cents. look at the sentence that needs to be filled and imagine what would logically follow.

And since paying higher rates inevitably strains the financial strength of a bank

If some one is paying higher interest rate for the money he/she borrowed, what will happen?

they will go bankrupt soon as principal stays the same and interest gets compounded if they don't pay whole interest every term. As the banks are under stress, they will NOT make money. If you look at the root cause its the depositors insurance that lead to the chain of events.

DI -> lack of incentive to verify bank's strength = only care about yield -> more stress on bank to get customers -> offer HI's -> increases banks' financial stress -> results in failure/difficult situations for banks

Hence B

--== Message from GMAT Club Team ==--

This is not a quality discussion. It has been retired.

If you would like to discuss this question please re-post it in the respective forum. Thank you!

To review the GMAT Club's Forums Posting Guidelines, please follow these links: Quantitative | Verbal Please note - we may remove posts that do not follow our posting guidelines. Thank you.
Re: CR: Gmat verbal Sets &nbs [#permalink] 18 Nov 2008, 22:17
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# Which of the following best completes the passage below? As

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