Question

Difficulty: HardPassage Assumptions and Underlying Premises

Read the passage below carefully:

To combat recurring severe urban flooding exacerbated by sea-level rise and erratic monsoon precipitation, several coastal municipal corporations have initiated funding mechanisms through specialized municipal green bonds to restore degraded urban wetlands. Proponents argue that restoring natural hydrological buffers such as wetlands and mangroves provides a cost-effective, self-sustaining alternative to building capital-intensive concrete drainage channels. However, municipal financial departments emphasize that bond issuance requires long-term revenue streams to guarantee coupon payments to institutional investors. Consequently, local authorities plan to levy targeted stormwater management fees on commercial real estate developments situated within designated flood-prone zones. By tying bond repayment directly to these specialized commercial levies, municipalities aim to ensure financial solvency while ecologically upgrading urban drainage infrastructure.

Statement: The author's proposition for maintaining the financial solvency of municipal green bonds relies on the unstated premise that commercial real estate developments in designated flood-prone zones have sufficient economic capacity to generate the targeted fee revenues.

Answer: Answer

Answer

The statement is True because the author's core financial strategy directly relies on collecting adequate revenue from commercial real estate in flood zones to service green bond obligations.
The claim is True because the author's financial model explicitly bridges bond solvency with commercial stormwater levies. If commercial real estate in those zones lacks the financial capacity to generate the necessary funds, the bond servicing mechanism collapses, making the premise logically indispensable.

Step-by-Step Solution

1
Identify the author's primary argument and proposed mechanism
The author proposes using municipal green bonds for wetland restoration and plans to service bond coupon payments via targeted stormwater fees on commercial real estate in flood-prone zones.
Understanding the logical chain connecting the funding tool to the revenue source is necessary to identify underlying premises.
2
Apply the negation test to the evaluated statement
Negate the statement: 'Commercial real estate developments in flood-prone zones do NOT have sufficient economic capacity to generate the targeted fee revenues.'
An assumption must be a necessary unstated condition without which the central conclusion fails.
3
Assess the impact of the negated assumption on the author's conclusion
If commercial developments cannot generate the required fee revenue, the municipality cannot meet its coupon payment obligations to institutional investors, breaking the financial solvency of the bond model.
Since negating the premise invalidates the author's conclusion, the statement is a necessary underlying assumption.

Key Concept

Passage Assumptions and Underlying Premises
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