All savings accounts are interest-bearing accounts. The interest from some interest-bearing accounts is tax-free, so there must be that have tax-free interest.
What this question is testing
Premise 1
All savings accounts are interest-bearing.
Premise 2
Some interest-bearing accounts have tax-free interest.
Conclusion
Therefore, some savings accounts have tax-free interest.
Evaluate
Picture two circles. The bigger circle is "interest-bearing accounts." Inside that bigger circle is a smaller circle, "savings accounts" (because all savings accounts are interest-bearing).
Now somewhere else in the bigger circle, there are accounts with tax-free interest. But "somewhere else" is the key phrase. Those tax-free accounts could be in the part of the bigger circle that does not overlap with savings accounts at all — like CDs or money market accounts. The argument assumes the tax-free ones must overlap with the savings-account circle, but nothing in the premises forces that.
That is the flaw: All A are B. Some B are C. So some A are C. The "some B" might not be A at all.
Goal
Find the answer with the same structure: All [smaller group] are [bigger group]. Some [bigger group] are [property]. Therefore, some [smaller group] are [property].
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