LSAT 129 – Section 2 – Question 03

LSAT 129 - Section 2 - Question 03

June 2009

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Question
QuickView		 Type Tags Answer
Choices		 Curve Question
Difficulty		 Psg/Game/S
Difficulty		 Explanation
PT129 S2 Q03
+LR
Resolve reconcile or explain +RRE
Math +Math
A
1%
158
B
1%
150
C
0%
154
D
96%
165
E
2%
154
127
136
144
 +Easier 144.702 +SubsectionEasier

MetroBank made loans to ten small companies, in amounts ranging from $1,000 to $100,000. These ten loans all had graduated payment plans, i.e., the scheduled monthly loan payment increased slightly each month over the five-year term of the loan. Nonetheless, the average payment received by MetroBank for these ten loans had decreased by the end of the five-year term.

"Surprising" Phenomenon
Despite the graduate payment plans, average loan payments to MetroBank had decreased by the end of the five-year term.

Objective
The correct answer will be a hypothesis explaining how the graduated payment plans could have result in lower average payments by the end of the five-year term. The hypothesis must account for the fact that the payment plans entailed a slight increase each month, while the result was ultimately a decrease by the end of the five-year term.

A
The number of small companies receiving new loans from MetroBank increased over the five-year term.
We’re talking about the ten companies in question. It doesn’t matter how MetroBank handled other companies.
B
Several of the ten small companies also borrowed money from other banks.
It doesn’t matter where else the small companies get their money from. We need to know why the average payment to MetroBank ended up decreasing.
C
Most banks offer a greater number of loans for under $100,000 than for over $100,000.
MetroBank loaned these companies $100,000 or less. Other banks don’t factor into our problem.
D
Of the ten small companies, the three that had borrowed the largest amounts paid off their loans within three years.
By the end of the five-year term, only seven of the ten companies were paying off their loans. Their loan payments were still increasing on a graduated plan, but MetroBank received a lower average payment overall since the bigger borrowers were out of the picture.
E
For some loans made by MetroBank, the monthly payment decreases slightly over the term of the loan.
Not these loans. According to the stimulus, the loans issued to small companies all had graduated payment plans, meaning the monthly payments were increasing.

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LSAT PrepTest 129 Explanations

Section 1 - Logical Reasoning

Section 2 - Logical Reasoning

Section 3 - Logical Reasoning

Section 4 - Reading Comprehension

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