ParadoxDiff: Easy
Logic Breakdown
Passage Summary: A bank has ten loans where the monthly bills are supposed to go up every month. However, by the end of five years, the average amount the bank actually collected from these loans went down.
Reasoning: No reasoning (Fact Set).
Analysis: The paradox lies in the contradiction between the 'graduated' schedule (where payments increase) and the actual 'average payment received' (which decreased). If the individual schedules are rising, the only way the total average could drop is if some of those loans are no longer being paid at all. Look for an answer that explains why the bank stopped receiving payments on some of the larger loans, such as defaults or early payoffs.
Reasoning: No reasoning (Fact Set).
Analysis: The paradox lies in the contradiction between the 'graduated' schedule (where payments increase) and the actual 'average payment received' (which decreased). If the individual schedules are rising, the only way the total average could drop is if some of those loans are no longer being paid at all. Look for an answer that explains why the bank stopped receiving payments on some of the larger loans, such as defaults or early payoffs.
Passage Stimulus
Passage Redacted
Unlock Full Passage3.Which one of the following, if true, most helps to resolve the apparent discrepancy in the statements above?
Correct Answer
D
If the three largest loans were paid off within three years, their payments became $0 thereafter. Losing those large payments later in the term can easily drop the average payment received across the ten loans, despite remaining loans’ scheduled increases.
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