Several of a certain bank’s top executives have recently been purchasing shares in their own bank. This activity has occasioned some surprise, since it is widely believed that the bank, carrying a large number of bad loans, is on the brink of collapse. Since the executives are well placed to know their bank’s true condition, it might seem that their share purchases show that the danger of collapse is exaggerated. However, the available information about the bank’s condition is from reliable and informed sources, and corporate executives do sometimes buy shares in their own company in a calculated attempt to calm worries about their company’s condition. On balance, therefore, it is likely that the executives of the bank are following this example.
In the argument given, the two boldfaced portions play which of the following roles?
A. The first describes the circumstance the explanation of which is the issue that the argument addresses; the second states the main conclusion of the argument.
B. The first describes the circumstance the explanation of which is the issue that the argument addresses; the second states a conclusion that is drawn in order to support the main conclusion of the argument.
C. the first provides evidence to defend the position that the argument seeks to establish against opposing positions; the second states the main conclusion of the argument.
D. The first provides evidence to support the position that the argument seeks to establish; the second states a conclusion that is drawn in order to support the argument’s main conclusion.
E. Each provides evidence to support the position that the argument seeks to establish.
SOLUTION
Understanding the Passage
| Text from Passage | Analysis |
| (Boldface 1) “Several of a certain bank’s top executives have recently been purchasing shares in their own bank.” | What it says: Bank executives are buying stock in their own company. Visualization: Bank ABC executives: Purchasing their own company shares ā CEO buys 1000 shares, CFO buys 500 shares, COO buys 750 shares What it does: This introduces the puzzling behavior that the entire argument will try to explain. Source: Author’s factual statement |
| “This activity has occasioned some surprise, since it is widely believed that the bank, carrying a large number of bad loans, is on the brink of collapse.” | What it says: People are surprised by the share purchases because everyone thinks the bank is about to fail due to bad loans. Visualization: Bank’s situation: million in bad loans ā Expected to collapse soon ā Yet executives buying shares (surprising behavior) What it does: This establishes why the executives’ behavior is puzzling and needs explanation. Source: Author reporting widely held belief |
| “Since the executives are well placed to know their bank’s true condition, it might seem that their share purchases show that the danger of collapse is exaggerated.” | What it says: One possible explanation is that executives have inside information showing the bank is actually healthier than people think. Visualization: Executive knowledge: True bank condition = healthy vs Public perception = healthy ā Share purchases signal optimism What it does: This presents the first potential explanation for the puzzling behavior – that it reflects genuine optimism. Source: Author presenting a possible interpretation |
| “However, the available information about the bank’s condition is from reliable and informed sources, and corporate executives do sometimes buy shares in their own company in a calculated attempt to calm worries about their company’s condition.” | What it says: But the negative information about the bank comes from trustworthy sources, and executives sometimes buy shares just to make things look better, not because they’re actually optimistic. Visualization: Information reliability: Trustworthy sources say chance of collapse + Executive strategy: Buy million in shares ā Public confidence increases from to What it does: This counters the optimistic explanation by providing evidence against it and offering an alternative cynical explanation. Source: Author’s counter-argument |
| (Boldface 2) “On balance, therefore, it is likely that the executives of the bank are following this example.” | What it says: The author concludes that the executives are probably buying shares as a PR move to calm fears, not because they’re genuinely optimistic. Visualization: Author’s conclusion: probability that executives using PR strategy vs probability of genuine optimism What it does: This is the author’s final judgment about which explanation is more likely. Source: Author’s conclusion |
Overall Structure
The author presents a puzzling situation (executives buying shares in a failing bank), considers an optimistic explanation, then argues against it and concludes that a more cynical explanation is probably correct.
Main Conclusion: The bank executives are likely buying shares as a calculated PR move to calm investor worries, not because they believe the bank is healthy.
Boldface Segments
- Boldface 1: Several of a certain bank’s top executives have recently been purchasing shares in their own bank.
- Boldface 2: On balance, therefore, it is likely that the executives of the bank are following this example.
Boldface Understanding
Boldface 1 Analysis:
- Function: Introduces the puzzling phenomenon that needs explanation
- Direction: Same direction as author’s conclusion (supports the overall argument by providing the behavior that needs explaining)
Boldface 2 Analysis:
- Function: States the author’s main conclusion about the most likely explanation
- Direction: Same direction as author’s conclusion (this IS the author’s conclusion)
Structural Classification
Boldface 1:
- Structural Role: Evidence/phenomenon that prompts the argument
- Predicted Answer Patterns: “fact that the argument seeks to explain,” “phenomenon that occasions the argument”
Boldface 2:
- Structural Role: Main conclusion of the argument
- Predicted Answer Patterns: “the conclusion of the argument,” “the author’s final position”
Answer Choices Explained
A. The first describes the circumstance the explanation of which is the issue that the argument addresses; the second states the main conclusion of the argument.
Choice A:
- “The first describes the circumstance the explanation of which is the issue that the argument addresses” – ā CORRECT – The first boldface presents the puzzling behavior (executives buying shares in a seemingly failing bank) that the entire argument seeks to explain.
- “the second states the main conclusion of the argument” – ā CORRECT – The second boldface, introduced by ‘On balance, therefore,’ presents the author’s final judgment about which explanation is most likely.
B. The first describes the circumstance the explanation of which is the issue that the argument addresses; the second states a conclusion that is drawn in order to support the main conclusion of the argument.
Choice B:
- “The first describes the circumstance the explanation of which is the issue that the argument addresses” – ā CORRECT – Same reasoning as Choice A.
- “the second states a conclusion that is drawn in order to support the main conclusion of the argument” – ā WRONG – The second boldface IS the main conclusion, not a supporting conclusion. There’s no further conclusion after it.
C. The first provides evidence to defend the position that the argument seeks to establish against opposing positions; the second states the main conclusion of the argument.
Choice C:
- “The first provides evidence to defend the position that the argument seeks to establish against opposing positions” – ā WRONG – The first boldface doesn’t defend any position; it simply presents a puzzling phenomenon that needs explanation.
- “the second states the main conclusion of the argument” – ā CORRECT – This part is accurate.
D. The first provides evidence to support the position that the argument seeks to establish; the second states a conclusion that is drawn in order to support the argument’s main conclusion.
Choice D:
- “The first provides evidence to support the position that the argument seeks to establish” – ā WRONG – The first boldface doesn’t provide evidence supporting the author’s position; it presents the puzzle that prompts the argument.
- “the second states a conclusion that is drawn in order to support the argument’s main conclusion” – ā WRONG – The second boldface IS the main conclusion, not a supporting conclusion.
E. Each provides evidence to support the position that the argument seeks to establish.
Choice E:
- “Each provides evidence to support the position that the argument seeks to establish” – ā WRONG – Neither boldface provides evidence. The first presents a phenomenon to be explained, and the second states the conclusion. The actual evidence appears in the non-bolded portions of the argument.
