PrepTest 129, Section 1, Question 23
In scientific journals, authors and reviewers have praised(35 more words not shown)
Which one of the following(11 more words not shown)
- AManagers within any(12 more words not shown)
- BClaims about the(9 more words not shown)
- CPeople with access(19 more words not shown)
- DMagazine publishers should(13 more words not shown)
- EFinancial advisers should(15 more words not shown)
Reading the argument
A scientist could sincerely admire a company's work and invest in it for that reason. The financial interest doesn't establish that the praise is false or dishonest.
Still, the potential conflict is relevant. Someone who stands to benefit if a company does well has an incentive that readers may want to know about when evaluating the praise. The argument responds by requiring disclosure of commercial holdings. It does not need to accuse every investor of misconduct for transparency to have a point.
What we’re looking for
There may be practical questions about how broad a disclosure system should be. But the task is to apply the principle illustrated by this argument. The general idea is that someone making recommendations or favorable assessments should reveal a financial interest that could influence them. Look for the same relationship between a recommendation, a personal financial incentive, and disclosure.
Working the answers
- A
This forbids managers from investing in their employers. The argument about scientists doesn't prohibit investment; it requires openness about it. A changes the proposed response to a potential conflict from disclosure to a ban.
- B
This concerns what evidence should support pharmaceutical claims. The argument concerns readers knowing about a writer's financial stake when assessing scientific discussion. Requiring studies doesn't itself require disclosure of that stake, so B misses the principle illustrated.
- C
This prohibits trading by people with private information about stock values. That is a restriction based on access to information, not a disclosure requirement for people who might profit from their recommendations. It changes both the relevant situation and the proposed response.
- D
A publisher's investment in an advertiser could raise a concern about conflicting interests, so the setting has some resemblance to the scientists' situation. But D again bans the investment. The original recommendation would instead have the financial relationship made known. A similar concern isn't enough when the response differs.
- ECorrect
The advisers make recommendations about investments while receiving incentives for promoting particular companies. Those incentives correspond to the scientists' financial interests, and telling clients corresponds to public disclosure for readers.
Think of an adviser receiving a commission if you choose a particular investment. Knowing about that commission helps you assess the recommendation without forcing you to conclude it must be bad. E follows the same disclosure principle: make the relevant financial interest visible to the people relying on the advice.
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