4. D
A: No. This is true because the underwriters’ fees are a percentage of the firm’s profits (paragraph 6).
B: No. This is also true. The underwriter guarantees the sale of securities (paragraph 6); therefore, when the securities (stock) don’t sell, the underwriter sustains a loss but the firm still receives the money. While this is not directly stated in the passage, it is implied. Therefore it is better supported than choice D, which directly contradicts the passage.
C: No. This is also true as an inference from the statement that “The reason for the high expense is, of course, the element of uncertainty and risk associated with public offerings of stock of small, relatively unknown firms” (paragraph 6).
D: Yes. This statement is false. The passage makes clear that underwriters are involved only in public offerings, not in private placements; paragraphs 4–8 all discuss public sale.
5. B
A: No. Private placement is a way of selling capital stock. As far as this passage goes, we do not even know if there is such a thing as “private stock.” The passage also clearly states that em-ployees can buy capital stock (paragraph 3).
B: Yes. Paragraph 2 discusses how the sale of capital stock dilutes ownership and how the origi-nal owner, after selling capital stock, owns less of her business.
C: No. This choice is too extreme. Paragraph 7 indicates that their financial arrangements are fre-quently “unsound” or often “not in the best interest of the small firms,” but we do not know that it leads to bankruptcy.
D: No. We are not given any information about what is the most common way businesses gener-ate capital. Sale of equity is described in paragraph 1 as one way, but no mention is made of the most common way.
6. B
A: No. This choice is too narrow. It can be inferred from paragraph 8, but it leaves out most of the major themes of the passage.
B: Yes. This is stated in the first paragraph; the rest of the passage explains the ways in which sale of equity may help raise money, and the specific issues involved in such a sale.
C: No. This choice is too narrow to be the main idea. Furthermore, the author does not indicate that relatively unknown firms, in particular, can succeed in “going public.”
D: No. This choice is too vague and general to capture the main idea of the passage, which is
specifically about the sale of capital stock.
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957. C
A: No. This choice takes a part of the passage (paragraph 7) out of context. The author makes no connection between SEC regulation on one hand, and whether or not small businesses make the best possible decisions on the other hand.
B: No. The SEC protects the public, not the owners (paragraph 5).
C: Yes. The SEC seeks to regulate firms in order to protect investors and the public from fraudulent offerings. This is implied by the statement “In undertaking the public sale of stock, the firm subjects itself to greater public regulation” (paragraph 5) and from the fact that the SEC is discussed in the context of public sale of stock.
D: No. Underwriters are discussed in the sixth paragraph, and there is no mention of the SEC there.
8. B
A: No. The correct answer will not be supported by the passage. Dilution of ownership is inevi-table whenever stock is sold, since stock owners become co-owners of the company: “This involves, of necessity, a dilution of ownership” (paragraph 2).
B: Yes. Sale of stock does not by itself necessarily result in growth. This is, in fact, the risk of investing in stocks.
C: No. Private sales may be subject to fewer requirements of the securities law (paragraph 3), but less regulation is still regulation. All sales of stock described in the passages are subject to the SEC.
D: No. Selling stock is tantamount to (the same as) acquiring capital (paragraph 2).
Passage 3
1. A
A: Yes. The first paragraph (the quote) and the second paragraph introduce the classical idea of dreams as a gift. The third paragraph refers to classical thought (Aeschylus) on dreams and human evolution. The final three paragraphs discuss modern research and ideas on sleep and dreaming. Therefore, this choice includes all aspects of the passage without being too general.
B: No. The author describes both ancient and modern ideas about sleep and dreaming, and suggests that we still do not fully understand the function of sleep (paragraph 6). Thus, the author is not advocating any one point of view, including a modern or technological view.
C: No. This statement is too narrow: it relates only to paragraph 4.
D: No. The passage provides no evidence of a controversy. If anything, the author seems to think the classical and modern understandings of sleep and dream are complementary.
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© The Princeton Review, Inc.2. A
A: Yes. The phrase “although in this case concentrating much more on the ‘evolver’ than on the evolved” (paragraph 2) implies that Prometheus Bound concentrates on Prometheus’s story, whereas Genesis focuses on the story of humanity. We know that Prometheus himself is not human (the “evolved”), as he has “introduced civilization to a befuddled and superstitious mankind” (paragraph 2). The passage describes him in the role of “evolver.”
B: No. Both works are referred to as “major works in Western literature” (paragraph 2).
C: No. According to the passage, both are works of literature that present “viable allegories” or symbolic stories (paragraph 2), not literal fact.
D: No. Both works are referred to simply as “works in Western literature” (paragraph 2). Histori-cal, cultural, and geographical differences are not mentioned.
3. D
A: No. Paragraph 6 indicates that vulnerability during sleep is one of the “worrisome aspects about the contention” that sleep has a restorative effect, not support for it.
B: No. We know that the actual evidence “seems to be sparse” (paragraph 6), so in this indeter-minate state there can be no final corroboration.
C: No. There is nothing to indicate that the worrisome aspects of the sleep-as-restoration hypoth-esis act to contradict that hypothesis, and sparse evidence is also no contradiction.
D: Yes. The passage states that “the actual evidence for this view, apart from its common-sense plausibility, seems to be sparse” (paragraph 6). This shows that the idea in question is sci-entifically unsupported (but not proven false or contradicted by the evidence), and that the author thinks the idea is intuitively attractive (or attractive in a common-sense manner).
4. B
A: No. There is nothing to suggest that the evidence itself (the studies of cerebrospinal fluid mentioned in the passage) is questionable; it is the author’s contention that this evidence must provide “a very powerful reason for sleep” (paragraph 5) that is questionable.
B: Yes. This is a questionable assumption in the author’s argument. Finding a biochemical basis for sleep enforcement does not in and of itself demonstrate that there is a powerful reason for, or purpose to, sleep. As a way of understanding why not, think about other physiologi-cal processes that may have a biochemical basis but no important purpose or function for human beings—for example, aging.
C: No. The author is assuming here that animal research is applicable to human beings—that animals and humans are alike in relevant ways—not that they differ. This choice contradicts that assumption.
D: No. See the explanation for choice B. The fact that biochemicals may force us to sleep does
not by itself prove that sleep serves an important function. This is what the author would like
to prove, but nothing has yet been “proven.”
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975. C
A: No. Something that begins the passage cannot be an elaboration; an elaboration would con-tinue a theme or idea already introduced.
B: No. People are only described as being “as beasts” prior to Prometheus’ gifts, and no sustained comparison occurs in the excerpt.
C: Yes. The author’s first paragraph shows us that the excerpt was used to introduce one “viable allegory [symbolic story] of the evolution of man.”
D: No. Neither the author nor the excerpt dispute or disagree with a contrasting point of view.
6. D
I: True. The sentence, “Our nocturnal vulnerability is very evident; the Greeks recognized Morpheus and Thanatos, the gods of sleep and death, as brothers” (paragraph 6) represents the author’s argument.
II: False. Even though we may think of the sleep/death experiences as similar in some ways (as in observing a sleeping person from afar), the author makes no mention of this fact to support his argument. This choice represents outside knowledge or personal opinion.
III: True. The author says animals are “exceptionally vulnerable” (paragraph 6) and applies this to humans as well. This suggests that sleep may lead to death in some situations.
7. B
A: No. The author does indeed make this comparison (paragraph 4), but this is not his purpose in raising the evidence of electroencephalography.
B: Yes. This is shown especially well in paragraph 4.
C: No. The brain’s energy requirements are not mentioned in the passage.
D: No. There is no direct connection between Aeschylus’s story and electroencephalographic evidence that waking, sleeping, and dreaming are three distinct states. These two parts of the passage have related yet distinct themes.
Passage 4
1. D
A: No. This choice contradicts the main theme of the passage, which is that we must look outside of ourselves.
B: No. See the explanation for choice A.
C: No. While the “not-Self” is in fact the universe, philosophic speculation would be the equiva-lent of contemplation. Thus the choice states that philosophic speculation should begin with contemplation of contemplation. Compare this directly with choice D.
D: Yes. The author states in the first paragraph that philosophic contemplation begins from the not-Self.
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© The Princeton Review, Inc.2. C
A: No. Philosophies that see “Man as the measure of all things” cut us off from knowledge and understanding of the “world beyond” (paragraph 2). According to the author, this is a “wide-spread philosophical tendency”; that is, what philosophies are inclined to do.
B: No. The author does not encourage us to study different philosophies, but instead describes the nature of true philosophic contemplation.
C: Yes. “Egocentric” can mean self-involved, seeing oneself as the center of all things. In para-graph 2 the author describes what he calls “those philosophies which assimilate the universe to Man.”
D: No. True philosophic contemplation will “value more the abstract and universal knowledge into which the accidents of private history do not enter” (paragraph 3). Abstraction is por-trayed positively, not negatively by the author. However, most philosophy tends to see man as
“the measure of all things,” and so to imprison us in an overly personal and private view of the world (paragraphs 2 and 3). Therefore, philosophies tend to do just the opposite of this answer choice.
3. A
A: Yes. The author does not explicitly address the imagination’s enrichment in this passage.
B: No. The author explores this answer choice in almost every sentence of the passage. Trans-forming an egocentric perspective to a more outward-looking point of view is one of the passage’s more important ideas.
C: No. The author refers to this answer choice in the last paragraph. In “true” contemplation, one’s “prejudices, habits, and desires” (paragraph 2) distorting real philosophic inquiry are among the “accidents of private history” (paragraph 3) that are left behind (paragraph 4).
D: No. The author alludes to this result of “true” philosophic pondering, especially in paragraph 4.
4. B
A: No. The author is using the word “law” figuratively in paragraph 2 to express a notion of certainty.
B: Yes. The whole sentence (in paragraph 2) says, “The man who finds pleasure in such a theory of knowledge is like the man....” That theory of knowledge is one that claims everything knowable is created by the mind.
C: No. The author talks about true philosophic contemplation in the next paragraph.
D: No. The author has already implicitly explained the nature of the not-Self and this “man” is instead like one who never contemplated the not-Self.
5. D
A: No. A simple awareness of life outside one’s Self (or oneself) does not define the “not-Self.”
B: No. A state of non self-centeredness might be necessary for a true appreciation of the not-Self, but it does not by itself constitute the not-Self.
C: No. There is no textual basis for this answer choice. The unconscious could still be part of the Self.
D: Yes. The relationship between the Self and the not-Self is set up in the first two paragraphs.
Key clues include the words “the infinity of the universe” and “the world beyond.” All the
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