Andrew is thinking about buying stock in E-Tron, a new company that sells electr
ID: 3289295 • Letter: A
Question
Andrew is thinking about buying stock in E-Tron, a new company that sells electronic equipment over the Internet. Six months ago, he bought shares in E-Boot, a new company that sells shoes over the Internet, and the price of the stock doubled in two months. Andrew argues that if he buys E-Tron, the stock will double in two months. How do the following facts bear on Andrew’s argument? (Identify if each will strengthen, weaken, or have no effect on andrews claim)
a. Stocks in Internet companies have been in a steep decline for the past two weeks, whereas they were rising six months ago.
b. E-Tron will be run by the same management team that runs E-Boot.
c. During the past year, the stock of five other new companies that sell over the Internet doubled within two months of their initial offering.
d. These five companies market Swiss chocolates, tires, appliances, furniture, and luggage.
e. A survey was taken of E-Boot customers, and 90 percent said they would not consider buying electronic equipment over the Internet.
f. Two other companies that market jewelry and lingerie over the Internet have done poorly.
g. America Online, the most widely used Net service provider, just increased its monthly service charge by 50 percent.
h. E-Boot is incorporated in New Jersey, whereas E-Tron is incorporated in Delaware.
i. E-Boot introduced its products with a major ad campaign, whereas E-Tron plans no such campaign.
j. Andrew changes his conclusion to state that E-Tron stock will triple within the next two months.
Explanation / Answer
a. The given fact weaken his argument as the price of shares were declining two weeks ago the trend of six months ago may not be followed.
b.this will strengthen his argument as the management is experienced and may perform well
c.it will strengthen his argument as companies might perform well in two months the trend can follow
d.this will have no effect as the companies doesn't seem to be related to electronic equipment
e. This will weaken as the customers don't seem interested
f.This will weaken his argument as the market condition doesn't seem good