PrepTest 68, Section 2, Question 21

Difficulty:

Justine: Pellman, Inc. settled the lawsuit out of court by paying $1 million. That Pellman settled instead of going to trial indicates their corporate leaders expected to lose in court.

Simon: It's unclear whether Pellman's leaders expected to lose in court. But I think they expected that, whether they won or lost the case, the legal fees involved in going to trial would have been more costly than the settlement. So settling the lawsuit seemed the most cost-effective solution.

Justine: Pellman, Inc. settled the lawsuit out of court by paying $1 million. That Pellman settled instead of going to trial indicates their corporate leaders expected to lose in court.

Question

The dialogue provides the most support for the claim that Justine and Simon disagree with each other about which one of the following?

If the lawsuit against Pellman had gone to trial, it is likely that Pellman would have lost in court.

Pellman's corporate leaders were able to accurately estimate their chances of winning in court.

If Pellman's legal fees for going to trial would have been more costly than the settlement, then settling the lawsuit was the most cost-effective solution for the corporation.

If Pellman's corporate leaders had expected that the legal fees for going to trial would have been less costly than the settlement, they would have taken the lawsuit to trial.

If Pellman's corporate leaders had expected to win in court, then they would not have settled the lawsuit out of court for $1 million.

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