#19 - Specific Reference, Must Be True, Purpose

[James Finch]

Hi Harvoolio,

Yes, that is right. Passage B is stating that stock analysis requires transparency, which means insider trading must be prohibited, which accords with answer choice (B)'s description. But Passage A analogizes simple analysis, of which different people have different levels of skills, ability, and information, to acting on insider information. This analogy cannot be described as "example of an activity that compensates for the market's lack of transparency," meaning (B) is a classic example of the half-right, half-wrong answer choice.

Hope this clears things up!

[harvoolio]

Yup it does. Thank you.

[Luna222]

Could someone please explain to me how D is the correct answer? I selected B and from the rest of the replies I understand how it is incorrect but I am still having trouble understanding how D is correct.

[Claire Horan]

Hi Luna222,

When you post a question, try to give some information about how you analyzed the question and what aspect you specifically had difficulty with. That way, the person answering can tailor their response a bit.

The question asks you to compare how the two passages refer to "analysis of information about stocks". Passage A brings up "analysis of information about stocks" in lines 11-14 as part of an argument that insider trading, defined as trading on information you have that others do not, is what traders do every day when they analyze whether a stock is overvalued or undervalued. Passage B brings up "analysis of information about stocks" in lines 40-42 as the skill that brings traders success in a transparent market, where information is available to all. The next paragraph then contrasts this situation with "insider-trading situations," where some participants have information that others don't have.

Thus, Passage A compares (notes the similarities between) "analysis of information about stocks" and "the acquisition of inside information", while Passage B contrasts (notes the differences between) "analysis of information about stocks" and "the acquisition of inside information." That's exactly what D says.

Please reply if you are still having trouble!

[Dancingbambarina]

I meant "exploiting" in its most neutral meaning here, Grace - using, or taking advantage of, without assigning any morality or judgment. Yes, the author of passage A is saying that insider trading is potentially a good thing because it results in passing information on to the market, although his main point is really that it's not a bad thing because it's just what the market is supposed to be about - using what you know to make smart choices. What I meant was not that the insiders were doing a bad thing, necessarily, but that they were getting an advantage from a lack of transparency rather than providing a solution that makes up for a lack of transparency.

I hope that clears it up!

I am still quite confused about the word "comparable".

In Passage A, this seems like an example, not a comparable of anything. I see how we can view this example in a comparable light as AC D says, but the word "comparable" ruined every chance in a million of me getting this question right.

Thank you again!

[Dana D]

Hey Dancing,

Can you explain why the word comparible is confusing you here? If you understand it to mean something like "an example of" in Passage A, then you have the correct understanding of the word. At the cited lines in passage A, the author is saying that insider trading is basically just an example of, or comparable to, knowing information about the stocks and selling it is doing your homework. Comparable literally means "equivalent or analogous to", which is what the author is trying to do here - make an analogy and say insider trading is just doing your homework.

Hope that helps!