UPSC CSAT : Reading Comprehension Home Exercise- 03, PASSAGE D

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Wednesday, 25 February 2015

Reading Comprehension Home Exercise- 03, PASSAGE D

             22. The author suggests that which of the following is a true statement about people who typify the “old –style capitalist”?

A.      They now rely on outdated management techniques.
B.      They seldom engaged in short term trading of the stock they owned.
C.      They did not influence the investment policies of the corporations in which they invested.
D.      They now play a very small role in the stock market as a result of antitrust legislation.
 
             23.  It can be inferred that the author makes which of the following assumptions about the businesses once controlled by individual capitalists?

A.      These businesses were less profitable that are businesses today.
B.      Improving long-term productivity led to increased profits.
C.      Each business had only a few stockholders.
D.      There was no short- term trading in the stock of these businesses.

            24. The author suggests that the role of large institutions as stockholders differs from that of the “old –style” capitalist “in part because large institutions.

A.      Invest in the stock of so many companies that they cannot focus attention on the affairs of any single corporation
B.      Are prohibited by law form owning a majority  of a corporation’s stock
C.      Are influenced by brokers who advise against long- term ownership of stocks
D.      Are able to put large amounts of stock on the market without depressing the stock’s values

            25. The primary function of the second paragraph of the passage is to

A.      Identify problems
B.      Warm of consequences
C.      Explain effects
D.      Recommend actions

Answer: 

22.  B    Old- style capitalist refers back to where there is a fuller description of the former environment, from which it is reasonable to infer what may be said to typify these investors. Such capitalists owned enough stock to dominate the board of detectors and dictate company policy. Since putting a lot of their stock on the market would only depress its value, these capitalists could not sell out for a quick profit and instead had to concentrate on improving the long- term productivity of their companies.

23.   B   the author argues that current shareholders and managers should follow the practice of old- style capitalists in seeking to enhance long-term productivity (and hence long- term profitability) of the companies in which they invest. Since the productivity and profitability are explicitly linked in current times, the author must assume that the companies controlled by the old-style capitalists were profitable.

24   B this question involves looking at the contrast the author draws between individual capitalists, who once owned enough stock to dominate the board of directors, and institutions, which have prohibited by antitrust laws from owning a majority of company’s stock.

25.   D   In order to determine the purpose of the second paragraph, look at the whole passage and follow the structure of the author’s argument. The author identifies a problem in the first paragraph, warning of the consequences if the problem is allowed to continue. The author then turns to a possible solution, making specific recommendations. The language the author uses is a call to action: legal limits … should be removed; institutions should be encouraged,; any institution … should be forced.

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