Which of the following is the most important assumption that underlies

QUESTION

Which of the following is the most important assumption that underlies Brandon’s advice?

A) The industries represented by BoxCorps and Excelsior are likely to grow at the same rate in the next few years.
B) Overall, stock market indices like NASDAQ and the Dow Jones are likely to grow to new highs in the near future.
C) Online research is necessary to determine which stocks are likely to increase in value.
D) A stock that is rapidly increasing in value is a better investment than one that has remained unchanged in value.
E) If the Excelsior stock turns out to be a disappointment, the club can sell it and purchase something else.

ANSWER

Answer: D
Explanation: D) Brandon’s stated justification for the move is that one stock has plateaued in valuation, while another is rising quickly. So Choice D is correct. If Brandon believes that the financial market is bullish (Choice B), then his argument is easier to make. An overall raise in stock indices, however, does not mean that every stock increases in value by the same increment. Choices C and E are obvious truths, but they do not tend to justify Excelsior as a better buy than BoxCorps. Choice A tends to undermine his advice, as it suggests that one is no more likely to outperform the other.