PrepTest 148

[lcid:3689] Prep Test 148 LSAT — Reading Comp — S2 Reading comp

Passage

 . Passage A  .       Insider-trading law makes it a crime to make  . stock transactions, or help others make stock Remaining source text redacted.
Passage walkthrough
Passage Summary

Topic: Legal Studies


Passage A

Paragraph 1

  • Paragraph note
    • A crime is defined
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Insider trading - stock transactions based on special info from working for the company

Paragraph 2

  • Paragraph note
    • Author questions the whether it should be a crime
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Trading based on info only you have - isn’t that part of a functioning market?
    • g. Analyzing a stock and deciding it’s overvalued (did your homework)

Paragraph 3

  • Paragraph note
    • How stock markets work, and when they function best
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Stock market - Reflects everyone’s info
    • Work best - All relevant info is spread widely and quickly

Paragraph 4

  • Paragraph note
    • Tying insider trading to functional stock market
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Insider info → Buy/sell a stock → Get that info out → Good for everyone!

Paragraph 5

  • Paragraph note
    • Insider trading compared to something else
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • “Insider nontrading” - when someone doesn’t sell/buy because of what they know
    • More common and clearly legal

Passage B

Paragraph 1

  • Paragraph note
    • A basic principle of the stock market is noted
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Basic principle - Transparency - Everyone has all the info at the same time, and skill determines who makes money

Paragraph 2

  • Paragraph note
    • Insider trading is showed to violate this principle
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • Insider trading - Some make decisions that others don’t
    • Author - That’s unfair
    • Outcome - Difficult/impossible for some to make money

Paragraph 3

  • Paragraph note
    • Eventual repercussions of insider trading
  • Views, minor Meta-Structures, points of intersection, and the author's attitude
    • People - Invest to make money
    • People trade with insider info → Investors lose confidence → Stop investing → Market destroyed

Main Points:

Passage A - Because it’s analogous to a practice that should clearly be legal and it gets information out quickly, insider trading is good for the stock market.

Passage B - Because it unfairly compromises the market and doesn’t reward skilled investing, insider trading can cause a loss of investor confidence that will destroy the market.

Key Lines?

Passage A:

  • Lines 6-8 - Rhetorical question that shows Author’s attitude
  • Lines 16-18 - Author’s opinion of when markets work “best”
  • Paragraph 4 - Step-by-step argument of how insider trading helps
  • Lines 35-36 - Author uses comparison to make same point

Passage B:

  • Lines 37-38 - Author states “basic principle[]” of stock market
  • Lines 50-51 - Author states opinion on insider trading (unfair)
  • Paragraph 3 - Step-by-step argument of how insider trading hurts

Meta-Structure? Relationship Between Passages?

Both passages feature strong opinions on the same topic - insider trading. However, their opinions are the opposite of each other. Passage A believes that insider trading is good for the stock market, in that it “helps spread the knowledge” quickly (Lines 24-27). Passage B, on the other hand, argues that it will “destroy the market” through a loss of investor confidence (Lines 55-56).

Causal chain - Both passages feature a causal chain of how insider trading will lead to the outcome they predict, even if that outcome is different. Passage A argues that someone learns insider info, causing them to trade on it, causing others to notice the change in price, causing the information to spread (Paragraph 4). Passage B argues that someone learns insider info, causing them to trade on it, causing others to lose confidence that they can make money without insider info, causing them to stop investing, causing the market to crash (Paragraph 3). These causal progressions will likely feature in at least one question.

Last Thoughts?

Passage A’s comparison to “insider nontrading” is interesting in that it almost functions as a separate argument, and one that falls into a common pattern of reasoning. If that paragraph was removed from the passage, the Author’s initial argument would still stand on its own. And that last paragraph could itself serve as the basis for a separate passage on why insider trading should be legal. It also serves as one of our common methods of reasoning - showing that similar logic in an analogous case leads to a ridiculous outcome (“No one would think to…”).

Question prompt

In their attitudes toward Remaining source text redacted.
Why the credited answer is right

Credited answer: B

The notes below walk through why it fits the stem and how to eliminate the rest.

Question Type

Legal

Strategy Overview

Reflect on the Authors’s overall attitude towards insider trading, focusing on opinion language in each passage

Answer Anticipation

Reading to identify the Author’s opinion is essentially the central task that we’re engaged in when reading through the passages, so we should have noted individual instances of opinion throughout the passage while also thinking about the overall opinion after we were done.In Passage A, the Author says that insider trading is “good for everyone in the stock market” since it gets information out quickly (Lines 27-30). Passage B’s Author, on the other hand, argues that insider trading “causes a loss of investor confidence and could ultimately destroy the market” (Lines 55-56). So Passage A has a positive view of insider trading, while Passage B has a strongly negative view. Let’s find an answer reflecting that.

Answer choices

  1. A
    positive and neutral
    Why choice A is not credited

    (A) (Lines 27-30; Lines 55-56) While Passage A’s Author believes that insider trading is good for the stock market, Passage B’s Author believes it could destroy it, so “neutral” here is wrong.

  2. B
    positive and negative
    Why choice B matches the stem

    (B) (Lines 27-30; Lines 55-56) Passage A’s Author believes insider trading is good for the market because it gets information out quickly. Passage B’s Author believes it could destroy the market by causing a loss of investor confidence. So this answer reflecting a positive and negative view, respectively, is correct.

  3. C
    neutral and negative
    Why choice C is not credited

    (C) (Lines 27-30; Lines 55-56) Passage A argues insider trading is good for the market, while Passage B argues that it could destroy it. Both of these attitudes are wrong!

  4. D
    neutral and neutral
    Why choice D is not credited

    (D) (Lines 27-30; Lines 55-56) Passage A argues insider trading is good for the market, while Passage B argues that it could destroy it. Both of these attitudes are wrong!

  5. E
    negative and negative
    Why choice E is not credited

    (E) (Lines 27-30; Lines 55-56) The Author of Passage B argues that insider trading causes a loss of confidence that could destroy the market, so he has a negative view of it. However, the Author of Passage A believes that insider trading is good for the market in that it spreads information quickly, so she doesn’t have a “negative” view of it.

What this tests

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