Economist GMAT Reading Comprehension Challenge #30

Economist GMAT Reading Comprehension Challenge #30

Welcome to the Economist GMAT Reading Comprehension! First time? Here are suggestions for approaching the article.

Economist Article

Economist Article: "Wirecard's scandal shows the benefits of short-sellers"


Paragraph Summaries

Germans consumed by tech envy of America...

Wirecard is a German financial tech company, among one of the leading firms on the German stock exchange but now on the brink of collapse after alleged market manipulation.

Wirecard's rise and fall is a case study in the carnage...

Wirecard was arguably pumped up by government regulators and investors who were so distracted by the company's narrative that they did not do a proper accounting. Short-sellers, who bet against publicly traded firms, noticed something was off about Wirecard years ago.

Questions about the firm's accouting...

Over the past 18 months, Germany's market regulator ignored increasing clamor from short-sellers about Wirecard and instead doubled down on its propping up the firm, banning short selling against it.

Big banks and investors...

Banks acted in accordance with regulators to continue to prop up Wirecard, perhaps out of ignorance and a lack of proper due diligence.

When so many clever people can get it wrong...

Counterbalancing forces such as short-sellers can be a valuable check on major market forces such as regulators and banks, especially in places where company managers can strongarm shareholders.

Those who bet against companies have long been eyed...

Although throughout history short-sellers have occasionally acted in bad faith, they frequently are more objectively discovering firms that are overvalued and unsustainable.

Shorting does more than just root out...

Short-sellers have a lot on the line financially by taking a position against companies, and their activity can both uncover illegitimate practices as well as act as a corrective force for stock prices of legitimate but overvalued firms.

More's the pity, then...

Governments have motivating forces to align themselves with rising firms within their countries while many places are increasingly curbing the ability to short-sell, yet short-sellers will continue to be important agents for keeping markets honest even when unpopular.

Primary Purpose

To acknowledge the sometimes-overlooked significance of a specific group of individuals.

Main Idea

Although short-sellers may be unpopular as a group that bets on the failure of companies, they nonetheless play a crucial role in keeping publicly traded firms accountable.

Happy Studies

Hope you found this Economist GMAT article interesting and helpful. Good luck on your GMAT!

Economist GMAT Reading Comprehension Challenge #27

Economist GMAT Reading Comprehension Challenge #27

Welcome back to the Economist Reading Comprehension Challenges! Just getting started? Here are some reading strategies on the EGRCC home page.

Economist Article

Economist Article: Walmart ekes out an edge in groceries during the pandemic


Paragraph Summaries

As COVID-19 began...

Amazon's pandemic-related expenses are eating away at its profits this quarter, while Walmart is performing comparatively better in certain respects.

On May 19th the answer...

Walmart's earnings suggest very strong performance. The year on year rate of revenue increase in the highest in nearly 20 years and "omnichannel" sales (online + in-store) are up by 74%. Walmart is outperforming Amazon on quarterly net income relative to last year (Amazon is down on this metric).

The sales surge was not...

Walmart's numbers can somewhat be attributed to heavy sales in March but have maintained since.

Walmart's performance owes...

Walmart is continually able to contain expenses - its cost of sales last quarter rose in line with revenues.

But the company has also...

Walmart has been flexible in its approach to fulfillment, drastically ramping up its "ship from stores" and two-hour delivery services.

Walmart allows shoppers...

Walmart accommodates "blended purchases" of food products - online orders that can be delivered or picked up curbside - and this helps drive omnichannel sales.

It is here that Walmart has outshone Amazon...

Amazon's online grocery delivery services suffer in comparison, with its Whole Foods grocery line being pricier than Walmart's alternative and its cheaper Amazon Fresh service struggling to meet demand in a timely manner.

This has allowed Walmart at last...

Walmart's ~$15B investment in e-commerce was considered a financial loss in previous years, but now the outlook is potentially a little brighter for the future.

Some new customers...

While some customers may not continue with Walmart's digital services once their preferred brick-and-mortar retailers reopen, evidence from the 2008 recession indicates that Walmart may retain many of them.

His view is bolstered...

A previous study suggests that future consumer behavior is tending less towards purely in-store or online retailers and more towards hybrid services like the one Walmart is using.

Primary Purpose

To discuss a surprising new trend and provide evidence that it may be able to persist

Main Idea

Walmart's grocery delivery and pickup service has overcome initial challenges and is now edging out Amazon's competing services in many important respects, and there are reasons to believe that competitive edge will persist into the long term.

Happy Studies

Hope you found the article interesting and the breakdown helpful. Good luck getting your GMAT reading in championship shape!

Economist GMAT Reading Comprehension Challenge #29

Economist GMAT Reading Comprehension Challenge #29

Welcome to the Economist GMAT Reading Comprehension Challenges! If this is your first article here are instructions for approaching the reading.

Economist Article

Economist Article: "The potential and the pitfalls of medical AI"


Paragraph Summaries

The books strewn around...

Introduction to Dr. Keane, a medical practitioner who is also working in artificial intelligence.

Dr. Keane is an ophthalmologist...

Though he practices ophthalmology (medicine focusing on eye disorders), Dr. Keane is invested heavily in computer science and is collaborating with Google's AI team to connect artificial intelligence and ophthalmology.

In Britain the number of...

Not enough ophthalmology practitioners exist to keep up with the demand of an aging population, but AI could - theoretically - make correct ocular diagnoses with high accuracy.

But Dr. Keane cautions...

A limiting factor on implementing AI for this purpose is that the tech isn't yet used on real patients.

The first is about getting data...

Drawback one -- Existing data used to train the artificial intelligence is not necessarily standardized or in a usable format.

Then there are the challenges of privacy and regulation...

Drawback two -- Patient medical records are strongly protected by law and it is unclear whether and how AI systems can incorporate this information.

Finally there is the question...

Drawback three -- AI systems use examples to make decisions, but the reasoning under the hood is mathematical and not easily "explainable". Vagueness is not good when prescribing medical procedures.

One approach is to highlight...

This paragraph gives a few examples of how AI models can be devised to communicate some degree of their "reasoning" in human-understandable ways, but different stakeholders in the process would prioritize different information. So it would be difficult to find a solution that satisfies everyone.

But even when it is widely deployed...

Dr. Keane predicts that the limitation of medical AI will be as a supplementary tool rather than as a wholesale replacement for doctors, who have many responsibilities above giving diagnoses.

Primary Purpose

To outline the practicalities and limitations of a promising new solution.

Main Idea

Artificial intelligence platforms have potential to become key tools in ophthalmological diagnoses, but several key practical limitations will prevent them from fully replacing doctors.

Happy Studies

Hope you found this Economist reading challenge helpful. Good luck on your GMAT!

Economist GMAT Reading Comprehension Challenge #28

Economist GMAT Reading Comprehension Challenge #28

Welcome to the Economist Reading Comprehension Challenges! If you're joining us for the first time here are instructions for approaching the reading.

Economist Article

Economist Article: When Theodore Roosevelt took on John Pierpont Morgan


Paragraph Summaries

Most authors might be content...

Berfield's book highlights the story of how then-President Theodore Roosevelt and banker J.P. Morgan began an unlikely collaboration to end a crisis.

The story begins with the assassination...

The author draws examples and quotations to demonstrate the extent of the antagonism between Morgan and Roosevelt prior to and at the beginning of Roosevelt's Presidency.

The book focuses on two linked events...

This paragraph gives the first of two events that put Morgan and Roosevelt in each other's orbits and on opposite sides of an issue -- when Roosevelt had used new anti-trust legislation to break up a railroad monopoly that Morgan had established.

Tales of hubristic tycoons...

This is the second event. During a coal miner strike that was poised to threaten New Yorkers' livelihoods, Morgan and Roosevelt worked together to prevent the worst.

Not long ago, this description...

Berfield's work has subtle implications that are arguably relevant to modern political discussions.

Primary Purpose

To highlight an unlikely historical relationship that has relevant modern implications.

Main Idea

Berfield's book draws interest from recounting the story of two historical opponents-turned-collaborators and relevance from its applicability to the modern world.

Happy Studies

Hope you found this Economist article interesting and the breakdown helpful. Good luck getting your GMAT reading and verbal in championship shape!

Economist GMAT Reading Comprehension Challenge #26

Economist GMAT Reading Comprehension Challenge #26

Welcome back to the Economist Reading Comprehension Challenges! If this is your first there are some helpful reading strategies on the home page.

Article: A lot of the periodic table is a result of neutron stars colliding


Living things are star...

Other than hydrogen from the big bang, elements from which life is composed came from the nuclear fusion that powers stars but that process has its limits and can't produce elements heavier than iron.

To synthesise...

Some of the elements heavier than iron have been produced by supernova but supernova can't account for the abundance of the heaviest metals which it is now confirmed are the products of collisions between ultra dense objects called neutron stars.

The neutron-star...

Neutron stars are the collapsed leftovers of particular types of supernova.

A single neutron...

Although a single neutron star cannot create new elements, two neutron stars orbiting each other might as they collide, creating an explosion called a kilonova that throws neutrons in all directions.

On Earth one ...

On Earth one established way of making heavy elements from light ones is by neutron bombardment.

In effect...

Neutron bombardment is a small-scale version of what happens after a neutron-star collision but although the theory was reasonable until recently no one had seen a kilonova and so could prove its existence.

In the wake...

Scientists used optical telescopes to scan the recent kilonova to collect spectra from the explosion and thus determine which elements were created.

Kilonovae are rare events...

Kilonovae are rare events although they were more common in the past.

Future observations...

More refined analysis is forthcoming but it is confirmed that heavy metals at least in part originated from Kilonova.

Main Idea

It is now confirmed that Kilonovae are responsible for heavy metals present on earth that can't be explained by supernovae.

Primary Purpose

To discuss a theory that has recently been confirmed by data.



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