PT 10, Section 4, Number 24

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helpplease

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PT 10, Section 4, Number 24

Postby helpplease » Mon Jun 04, 2012 6:39 pm

I'm having a really tough time understanding the reasoning behind the correct answer to this question and was wondering whether anybody could help me out. It doesn't help that the stimulus revolves around economics -__-

When the rate of inflation...

Correct answer is C. I picked B. Thanks!!
Last edited by helpplease on Mon Jun 04, 2012 6:58 pm, edited 1 time in total.

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Br3v

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Re: PT 10, Section 4, Number 24

Postby Br3v » Mon Jun 04, 2012 6:44 pm


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rinkrat19

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Re: PT 10, Section 4, Number 24

Postby rinkrat19 » Mon Jun 04, 2012 6:52 pm

Do not post the text of actual PT questions here. Reference it by test, section, problem.

helpplease

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Re: PT 10, Section 4, Number 24

Postby helpplease » Mon Jun 04, 2012 6:59 pm

rinkrat19 wrote:Do not post the text of actual PT questions here. Reference it by test, section, problem.


Sorry, didn't know!



Thanks, but I already saw their explanation. Didn't quite help me as much as I needed.

foggynotion

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Re: PT 10, Section 4, Number 24

Postby foggynotion » Tue Jun 05, 2012 4:32 am

I think it's really just saying, to figure out how much by which investment X will decline, you subtract it's rate of return from the inflation rate. The most profitable investment will have the highest rate of return, so when you subtract that from the rate of inflation, it's going to have the lowest percentage of decline--any other investment would have a lower rate of return, which, when subtracted from the inflation rate, would have to result in a larger percentage of decline.

I hope this makes sense.

bp shinners

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Re: PT 10, Section 4, Number 24

Postby bp shinners » Tue Jun 05, 2012 1:41 pm

helpplease wrote:I'm having a really tough time understanding the reasoning behind the correct answer to this question and was wondering whether anybody could help me out. It doesn't help that the stimulus revolves around economics -__-

When the rate of inflation...

Correct answer is C. I picked B. Thanks!!


I answered in the ask the experts thread, but I'll address B here.

B says that the investment is becoming less profitable. In order for something to become less profitable, I have to know two different points in time, and they have to be different (one higher, one lower). This stimulus is only talking about one point in time, so I can't say it's becoming less profitable.

helpplease

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Re: PT 10, Section 4, Number 24

Postby helpplease » Tue Jun 05, 2012 2:21 pm

bp shinners wrote:
helpplease wrote:I'm having a really tough time understanding the reasoning behind the correct answer to this question and was wondering whether anybody could help me out. It doesn't help that the stimulus revolves around economics -__-

When the rate of inflation...

Correct answer is C. I picked B. Thanks!!


I answered in the ask the experts thread, but I'll address B here.

B says that the investment is becoming less profitable. In order for something to become less profitable, I have to know two different points in time, and they have to be different (one higher, one lower). This stimulus is only talking about one point in time, so I can't say it's becoming less profitable.


Thank you so much! Your explanation really helped!



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