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Comment on Portfolio Managers
Why D is not a correct answer
The argument suggests that,
The argument suggests that, if portfolio managers are prevented from engaging in ONE specific activity (short selling), then those managers cannot provide above average returns.
For this to be a valid argument, it must be the case that short-selling is a definite requirement for providing above average returns. In other words, there's nothing else a portfolio manager can do (other than engaging in short-selling) to provide above average returns.
Answer choice B says exactly this.
Answer choice D says that short-selling has been used in the past to provide above-average returns. but it doesn't say that portfolio managers have no other strategies (beyond short-selling) that will yield above-average returns.
Hi Brent, I tried to enlist
1. Above avg returns only by SS
2. Same Managers
3. Same economic evironment
4. No other factor affected fall in returns
I know that these many assumptions are not required but just wanted to know that are these assumptions correct?
Assumptions 1 and 4 look good.
I'm not sure what you mean with assumptions 2 and 3.
Aside: You can test the validity of each assumption by applying the Negation Technique.
By assumption 2, I mean that
And by assumption 3, I mean that there is no sudden change in economic environment, which might otherwise affect the returns
Thanks for the clarification.
Thanks for the clarification. Yes, I think those are valid assumptions.
Good day Brent, Please can
The best way to understand
The best way to understand the mechanics of the negation technique is to see this strategy in action.
Here are a few questions to get you going (you'll see that I have provided a detailed solution to each question):
I hope that helps.
Many thanks, I will go
Hi Brent, to clarify with
Also are we meant to strengthen or weaken as it seems to strengthen when answer choices have no negative words and to weaken when there is negative words in the answer choices?
Are you referring to the
Are you referring to the Negation Technique?
If so, I think it's best to look for the answer choice that, when negated, destroys the ARGUMENT (i.e., how well the conclusion follows from the premises).
This means we can attack the premises, conclusion or both.
That clarify all my confusion
In order to use the Negation
Said that, I have a problem regarding my approach. What should I do if the assumption has a "never" or a "often" in it, Would you change the "never" for "always"?
NEVER is the same as "zero times"
So, the negation of NEVER is "NOT zero times"
"NOT zero times" is the same as "At least one time"
So, if we take the premise "Joe has NEVER bathed" and negate it, we get: "Joe has bathed at least once"
OFTEN, on the other hand, doesn't have a precise negation.
I'd say the negation of OFTEN is NOT OFTEN
Hi Brent, I thought we should
You're correct to say that
You're correct to say that ONLY is an extreme word, but this doesn't mean it's never correct.
The Argument states something
You're right to say that the
You're right to say that the new rules apply to ALL portfolio managers. However, the fact that only one manager made a conclusion has no bearing. We're asked to find a necessary assumption for that conclusion, so it makes no difference how many people made that conclusion.
As for answer choice D: If we NEGATE this answer choice, we get: Portfolio managers do NOT often use short selling techniques to provide above-average returns for corporate clients." Does this negated assumption destroy the argument that the new rules prevent managers from making big money for their corporate clients? No it does not. If anything it helps the argument by suggesting that portfolio managers have other ways to generate above-average returns for corporate clients.
Does that help?
Thanks it was helpful.