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Federal efforts to aid minority businesses began in the

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Federal efforts to aid minority businesses began in the [#permalink]

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Federal efforts to aid minority businesses began in the 1960's when the small business administration (sba) began making federally guaranteed loans and government-sponsored management and technical assistance available to minority business enterprises. while this program enabled many minority entrepreneurs to form new businesses, the results were disappointing, since managerial inexperience, unfavorable locations, and capital shortages led to high failure rates. even 15 years after the program was implemented, minority business receipts were not quite two percent of the national economy's total receipts. Recently federal policymakers have adopted an approach intended to accelerate development of the minority business sector by moving away from directly aiding small minority enterprises and toward supporting larger, growth-oriented minority firms through intermediary companies. in this approach, large corporations participate in the development of successful and stable minority businesses by making use of government-sponsored venture capital. the capital is used by a participating company to establish a minority enterprise small business investment company or mesbic. the mesbic then provides capital and guidance to minority businesses that have potential to become future suppliers or customers of the sponsoring company.

Mesbic's are the result of the belief that providing established firms with easier access to relevant management techniques and more job-specific experience, as well as substantial amounts of capital, gives those firms a greater opportunity to develop sound business foundations than does simply making general management experience and small amounts of capital available. further, since potential markets for the minority businesses already exist through the sponsoring companies, the minority businesses face considerably less risk in terms of location and market fluctuation. following (38)early financial and operating problems, sponsoring corporations began to capitalize mesbic's far above the legal minimum of $500,000 in order to generate sufficient income and to sustain the quality of management needed. mesbic'c are now emerging as increasingly important financing sources for minority enterprises.

Ironically, mesbic staffs, which usually consist of hispanic and black professionals, tend to approach investments in minority firms more pragmatically than do many mesbic directors, who are usually senior managers from sponsoring corporations. the latter often still think mainly in terms of the "social responsibility approach" and thus seem to prefer deals that are riskier and less attractive than normal investment criteria would warrant. such differences in viewpoint have produced uneasiness among many minority staff members, who feel that minority entrepreneurs and businesses should be judged by established business considerations. these staff members believe their point of view is closer to the original philosophy of mesbic's and they are concerned that, unless a more prudent course is followed, mesbic directors may revert to policies likely to recreate the disappointing results of the original sba
approach.
1. which of the following best states the central idea of the passage?
(a) the use of mesbic's for aiding minority entrepreneurs seems to have greater potential for success than does the original sba approach.
(b) there is a crucial difference in point of view between the staff and directors of some mesbic's.
(c) after initial problems with management and marketing, minority businesses have begun to expand at a steady rate.
(d) minority entrepreneurs wishing to form new businesses now have several equally successful federal programs on which to rely.
(e) for the first time since 1960, large corporations are making significant contributions to the development of minority businesses.
[Reveal] Spoiler:
A


2. according to the passage, the mesbic approach differs from the sba approach in that mesbic's
(a) seek federal contracts to provide markets for minority businesses
(b) encourage minority businesses to provide markets for other minority businesses
(c) attempt to maintain a specified rate of growth in the minority business sector
(d) rely on the participation of large corporations to finance minority businesses
(e) select minority businesses on the basis of their location
[Reveal] Spoiler:
D


3. which of the following does the author cite to support the conclusion that the results of the sba program were disappointing?
(a) the small number of new minority enterprises formed as a result of the program
(b) the small number of minority enterprises that took advantage of the management and technical assistance offiered under the program
(c) the small percentage of the nation's business receipts earned by minority enterprises following the programs, implementation.
(d) the small percentage of recipient minority enterprises that were able to repay federally guaranteed loans made under the program
(e) the small number of minority enterprises that chose to participate in the program
[Reveal] Spoiler:
C


4. which of the following statements about the sba program can be inferred from the passage?
(a) the maximum term for loans made to recipient businesses was 15 years.
(b) business loans were considered to be more useful to recipient businesses than was management and technical assistance.
(c) the anticipated failure rate for recipient businesses was significantly lower than the rate that actually resulted.
(d) recipient businesses were encouraged to relocate to areas more favorable for business development.
(e) the capitalization needs of recipient businesses were assessed and then provided for adequately.
[Reveal] Spoiler:
C


5. based on information in the passage, which of the following would be indicative of the pragmatism of mesbic staff members?
Ⅰ.a reluctance to invest in minority businesses that show marginal expectations of return on the investments
Ⅱ. a desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
Ⅲ. a belief that the minority business sector is best served by investing primarily in newly established businesses
(a)Ⅰonly
(b) Ⅲ only
(c)Ⅰand Ⅱ only
(d)Ⅱ and Ⅲ only
(e)Ⅰ,Ⅱ and Ⅲ
[Reveal] Spoiler:
C


6. the author refers to the "financial and operating problems"(line 38 ) encountered by mesbic's primarily in order to
(a) broaden the scope of the discussion to include the legal considerations of funding mesbic's through sponsoring companies
(b) call attention to the fact that mesbic's must receive adequate funding in order to function effectively
(c) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original mesbic's
(d) compare sba and mesbic limits on minimum funding
(e) refute suggestions that mesbic's have been only marginally successful
[Reveal] Spoiler:
B


7. the author's primary objective in the passage is to
(a) disprove the view that federal efforts to aid minority businesses have been ineffective
(b) explain how federal efforts to aid minority businesses have changed since the 1960's
(c) establish a direct link between the federal efforts to aid minority businesses made before the 1960's and those made in the 1980's
(d) analyze the basis for the belief that job-specific experience is more useful to minority businesses than is general management experience
(e) argue that the "social responsibility approach" to aiding minority businesses is superior to any other approach
[Reveal] Spoiler:
B


8. it can be inferred from the passage that the attitude of some mesbic staff members toward the investments preferred by some mesbic directors can best be described as
(a) defensive
(b) resigned
(c) indifferent
(d) shocked
(e) disapproving
[Reveal] Spoiler:
E


9. the passage provides information that would answer which of the following questions?
(a) what was the average annual amount, in dollars, of minority business receipts before the sba strategy was implemented?
(b) what locations are considered to be unfavorable for minority businesses?
(c) what is the current success rate for minority businesses that are capitalized by mesbic's?
(d) how has the use of federal funding for minority businesses changed since the 1960's?
(e) how do minority businesses apply to participate in a mesbic program?
[Reveal] Spoiler:
D

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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 20 Feb 2004, 11:12
my Answers are
A
D
C
B
A (B could be true)
B
B (C could be true)
E
E
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 23 Feb 2004, 23:58
anandnk wrote:
my Answers are
A
D
C
B
A (B could be true)
B
B (C could be true)
E
E


1. A
2. D
3. C
4. C
5. C
6. B
7. B
8. E
9. D
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 01 Oct 2012, 22:33
can anyone explain 6th question . why not A ?? and how can we imply need of adequate funding from this context ??
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New post 18 Oct 2012, 13:55
I got and my time was 16.30 mins. OA anyone?
1) A
2) B
3) C
4) B
5) C
6) D
7) B
8) E
9) D
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 18 Oct 2012, 15:02
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Here are my reasons for the answers I chose. They may not all be right, but I figured this is a good way to really get involved in the discussions. So please feel free to chime in. Thx!

1. which of the following best states the central idea of the passage?
(a) the use of mesbic's for aiding minority entrepreneurs seems to have greater potential for success than does the original sba approach.
(b) there is a crucial difference in point of view between the staff and directors of some mesbic's.
(c) after initial problems with management and marketing, minority businesses have begun to expand at a steady rate.
(d) minority entrepreneurs wishing to form new businesses now have several equally successful federal programs on which to rely.
(e) for the first time since 1960, large corporations are making significant contributions to the development of minority businesses.


2. according to the passage, the mesbic approach differs from the sba approach in that mesbic's
(a) seek federal contracts to provide markets for minority businesses
(b) encourage minority businesses to provide markets for other minority businesses
(c) attempt to maintain a specified rate of growth in the minority business sector
(d) rely on the participation of large corporations to finance minority businesses - I chose B but I think I now see others posted D as the answer and I think that makes more sense. "large corporations participate in the development of successful and stable minority businesses by making use of government-sponsored venture capital"
(e) select minority businesses on the basis of their location


3. which of the following does the author cite to support the conclusion that the results of the sba program were disappointing?
(a) the small number of new minority enterprises formed as a result of the program
(b) the small number of minority enterprises that took advantage of the management and technical assistance offiered under the program
(c) the small percentage of the nation's business receipts earned by minority enterprises following the programs, implementation.
(d) the small percentage of recipient minority enterprises that were able to repay federally guaranteed loans made under the program
(e) the small number of minority enterprises that chose to participate in the program


4. which of the following statements about the sba program can be inferred from the passage?
(a) the maximum term for loans made to recipient businesses was 15 years.
(b) business loans were considered to be more useful to recipient businesses than was management and technical assistance. - "mesbic's are the result of the belief that providing established firms with easier access to relevant management techniques and more job-specific experience, as well as substantial amounts of capital, gives those firms a greater opportunity to develop sound business foundations than does simply making general management experience and small amounts of capital available."
(c) the anticipated failure rate for recipient businesses was significantly lower than the rate that actually resulted.
(d) recipient businesses were encouraged to relocate to areas more favorable for business development.
(e) the capitalization needs of recipient businesses were assessed and then provided for adequately.


5. based on information in the passage, which of the following would be indicative of the pragmatism of mesbic staff members?
Ⅰ.a reluctance to invest in minority businesses that show marginal expectations of return on the investments
Ⅱ. a desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
Ⅲ. a belief that the minority business sector is best served by investing primarily in newly established businesses
(a)Ⅰonly
(b) Ⅲ only
(c)Ⅰand Ⅱ only - "minority staff members, who feel that minority entrepreneurs and businesses should be judged by established business considerations. these staff members believe their point of view is closer to the original philosophy of mesbic's." It does talk about investing in established businesses, but not NEWLY established business and so I did not pick III
(d)Ⅱ and Ⅲ only
(e)Ⅰ,Ⅱ and Ⅲ


6. the author refers to the "financial and operating problems"(line 38 ) encountered by mesbic's primarily in order to
(a) broaden the scope of the discussion to include the legal considerations of funding mesbic's through sponsoring companies
(b) call attention to the fact that mesbic's must receive adequate funding in order to function effectively
(c) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original mesbic's
(d) compare sba and mesbic limits on minimum funding - "while this program enabled many minority entrepreneurs to form new businesses, the results were disappointing, since managerial inexperience, unfavorable locations, and capital shortages led to high failure rates.I figured that's the reference being made with the "financial and operating problems from sba's model.
(e) refute suggestions that mesbic's have been only marginally successful


7. the author's primary objective in the passage is to
(a) disprove the view that federal efforts to aid minority businesses have been ineffective
(b) explain how federal efforts to aid minority businesses have changed since the 1960's
(c) establish a direct link between the federal efforts to aid minority businesses made before the 1960's and those made in the 1980's
(d) analyze the basis for the belief that job-specific experience is more useful to minority businesses than is general management experience
(e) argue that the "social responsibility approach" to aiding minority businesses is superior to any other approach


8. it can be inferred from the passage that the attitude of some mesbic staff members toward the investments preferred by some mesbic directors can best be described as
(a) defensive
(b) resigned
(c) indifferent
(d) shocked
(e) disapproving


9. the passage provides information that would answer which of the following questions?
(a) what was the average annual amount, in dollars, of minority business receipts before the sba strategy was implemented?
(b) what locations are considered to be unfavorable for minority businesses?
(c) what is the current success rate for minority businesses that are capitalized by mesbic's?
(d) how has the use of federal funding for minority businesses changed since the 1960's? - talks about the start of sba in the 1960's, the high failure rate, the transition to mesbic's, and it's increasing success
(e) how do minority businesses apply to participate in a mesbic program?
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 31 Oct 2013, 09:34
1. a
2. d
3. c
4. b
5. c
6. b
7. b
8. e
9. d
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 01 Mar 2015, 05:07
I got questions 1 and 4 wrong. It took me 13 minutes to complete.

My answers:

1. C - I stuffed this one up; my success rate on central idea/premise-type questions needs to be increased! The OA ties up the whole passage vs. my answer choice, and I'd missed the 'mesbic' key word that should have been part of the correct answer.
2. D
3. C
4. B - the OA being C; the relevant line is: ...while the results were disappointing, since managerial inexperience, unfavorable locations, and capital shortages led to high failure rates. On choice B, the passage mentions nothing about the usefulness of management/technical assistance relative to business loans, and it's therefore a stretch to consider one was useful over another.
5. C
6. B
7. B
8. E
9. D
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 02 Mar 2015, 11:37
passage is relatively easier but I am not able to understand the answer choice for Q4. Can anybody please explain?
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it is a 700-level question.
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New post 19 Nov 2015, 08:41
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CAN SOMEBODY EXPLAIN WHY THE OA OF QUESTION NO. 4 IS C
I HAVE A REASON WHY THE ANSWER SHOULD NOT BE C, LETS ASSUME THAT OA IS RIGHT THEN GOVERNMENT SHOULD HAVE CONTINUE WITH SCHEME INSTEAD OF SCRAPPING IT AND SUBSTITUTING WITH A BETTER POLICY.
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 14 Feb 2016, 23:02
Hi, that's precisely why Question no.4's answer is C.

Lets look at it this way :

1. The government thought SBA program would be successful. So it started it.
2. But then they replaced SBA with MESBIC.

So, they had previously thought that SBA program will be successful. But it was not. Hence they started MESBIC.
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 15 Feb 2016, 10:19
LUTHRASAGAR913 wrote:
CAN SOMEBODY EXPLAIN WHY THE OA OF QUESTION NO. 4 IS C
I HAVE A REASON WHY THE ANSWER SHOULD NOT BE C, LETS ASSUME THAT OA IS RIGHT THEN GOVERNMENT SHOULD HAVE CONTINUE WITH SCHEME INSTEAD OF SCRAPPING IT AND SUBSTITUTING WITH A BETTER POLICY.

"the results were disappointing, since managerial inexperience, unfavorable locations, and capital shortages led to high failure rates"

With mesbic they specifically solve all of those problems (managerial inexperience, unfavorable locations and capital shortages)
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 20 Jun 2016, 10:22
Can anyone explain why 7th answer is B? Because in passage its saying that Federal begun to aid Minority business in 1960, but in option B we have presumed that Federal already helping the minority businesses before 1960 and changed it after that.
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Re: Federal efforts to aid minority businesses began in the [#permalink]

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New post 30 Jun 2016, 05:07
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This is my logic.

1. which of the following best states the central idea of the passage?
(a) the use of mesbic's for aiding minority entrepreneurs seems to have greater potential for success than does the original sba approach.
Central idea of the passage. It stated that SBA was a failure and here came the great Mesbic.
(b) there is a crucial difference in point of view between the staff and directors of some mesbic's.
Too local. Mentioned only in P3
(c) after initial problems with management and marketing, minority businesses have begun to expand at a steady rate.
Too local. Only mentioned in end of P2
(d) minority entrepreneurs wishing to form new businesses now have several equally successful federal programs on which to rely.
Do they really have different program? Only SBA (unsuccessful) and Mesbic (better) are mentioned
(e) for the first time since 1960, large corporations are making significant contributions to the development of minority businesses.
Maybe it was the first time since 1960. But this is not the central idea. You can maybe infer that it was the first time
[Reveal] Spoiler:
A


2. according to the passage, the mesbic approach differs from the sba approach in that mesbic's
(a) seek federal contracts to provide markets for minority businesses
This is SBA approach
(b) encourage minority businesses to provide markets for other minority businesses
Out of scope. The passage did not mention having minority bussinesses helping out other small busineeses. Only either SBA (Gov to minority) or Mesbic (Gov -> Investment companies -> small companies)
(c) attempt to maintain a specified rate of growth in the minority business sector
"maintain"? did mesbic maintain a growth rate? No mention of mesbic growth rate.
(d) rely on the participation of large corporations to finance minority businesses
Correct. SBA (Gov -> minority) is different with Mesbic (Gov -> investment companies -> minority)
(e) select minority businesses on the basis of their location
No mention of selecting due to location of businesses
[Reveal] Spoiler:
D


3. which of the following does the author cite to support the conclusion that the results of the sba program were disappointing?
Scan P2 for backup data. Realize that it's the number of receipts. Look for "receipts" in answer choice
(a) the small number of new minority enterprises formed as a result of the program
(b) the small number of minority enterprises that took advantage of the management and technical assistance offiered under the program
(c) the small percentage of the nation's business receipts earned by minority enterprises following the programs, implementation.
even 15 years after the program was implemented, minority business receipts were not quite two percent of the national economy's total receipts.
(d) the small percentage of recipient minority enterprises that were able to repay federally guaranteed loans made under the program
(e) the small number of minority enterprises that chose to participate in the program
[Reveal] Spoiler:
C


4. which of the following statements about the sba program can be inferred from the passage?
(a) the maximum term for loans made to recipient businesses was 15 years.
"After 15 years" cannot be inferred to 15-year loan
(b) business loans were considered to be more useful to recipient businesses than was management and technical assistance.
Mentioned of the 3 "since managerial inexperience, unfavorable locations, and capital shortages led to high ..." but did not point out one is superior than others
(c) the anticipated failure rate for recipient businesses was significantly lower than the rate that actually resulted.
Passage mentions: "The results were disappointing" means they anticipate success rate to be high (or failure rate to be low) and actual is the opposite: success rate is low (and failure rate is high)
(d) recipient businesses were encouraged to relocate to areas more favorable for business development.
No mention
(e) the capitalization needs of recipient businesses were assessed and then provided for adequately.
[Reveal] Spoiler:
C


5. based on information in the passage, which of the following would be indicative of the pragmatism of mesbic staff members?
I got this one wrong. I chose A which is I only. Not sure how II is correct...
Ⅰ.a reluctance to invest in minority businesses that show marginal expectations of return on the investments
I is obviously correct to me. Directors prefer "risky investments" = "marginal return on investments"
Ⅱ. a desire to invest in minority businesses that produce goods and services likely to be of use to the sponsoring company
Not entirely sure about this one.
Ⅲ. a belief that the minority business sector is best served by investing primarily in newly established businesses

(a)Ⅰonly
(b) Ⅲ only
(c)Ⅰand Ⅱ only
(d)Ⅱ and Ⅲ only
(e)Ⅰ,Ⅱ and Ⅲ
[Reveal] Spoiler:
C


6. the author refers to the "financial and operating problems"(line 38 ) encountered by mesbic's primarily in order to
Prethink: How mesbic different with SBA, solves prior problems (not enought of funding)
(a) broaden the scope of the discussion to include the legal considerations of funding mesbic's through sponsoring companies
(b) call attention to the fact that mesbic's must receive adequate funding in order to function effectively
"adequate funding" is the key to me
(c) show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original mesbic's
(d) compare sba and mesbic limits on minimum funding
(e) refute suggestions that mesbic's have been only marginally successful
[Reveal] Spoiler:
B


7. the author's primary objective in the passage is to
Scan first word to have the tone of author
(a) disprove the view that federal efforts to aid minority businesses have been ineffective
"disprove" is a pretty strong tone. Do not match with the neutral tone
(b) explain how federal efforts to aid minority businesses have changed since the 1960's
Neutral tone. Stay high level. Good overall objective choice.
(c) establish a direct link between the federal efforts to aid minority businesses made before the 1960's and those made in the 1980's
(d) analyze the basis for the belief that job-specific experience is more useful to minority businesses than is general management experience
(e) argue that the "social responsibility approach" to aiding minority businesses is superior to any other approach
[Reveal] Spoiler:
B


8. it can be inferred from the passage that the attitude of some mesbic staff members toward the investments preferred by some mesbic directors can best be described as
(a) defensive Too strong
(b) resigned
(c) indifferent The staffs obviously felt different enough
(d) shocked No mention of surprise/shock
(e) disapproving Correct. Staffs think that the directors are wrong in their selection criteria
[Reveal] Spoiler:
E


9. the passage provides information that would answer which of the following questions?
(a) what was the average annual amount, in dollars, of minority business receipts before the sba strategy was implemented?
(b) what locations are considered to be unfavorable for minority businesses?
(c) what is the current success rate for minority businesses that are capitalized by mesbic's?
(d) how has the use of federal funding for minority businesses changed since the 1960's?
Match with central idea of passage
(e) how do minority businesses apply to participate in a mesbic program?
[Reveal] Spoiler:
D
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New post 11 Jul 2016, 17:02
2. according to the passage, the mesbic approach differs from the sba approach in that mesbic's
(a) seek federal contracts to provide markets for minority businesses
(b) encourage minority businesses to provide markets for other minority businesses
(c) attempt to maintain a specified rate of growth in the minority business sector
(d) rely on the participation of large corporations to finance minority businesses
(e) select minority businesses on the basis of their location
[Reveal] Spoiler:
D


I don't understand how the answer to this Q2 is D. It's mentioned in the passage that the capital was Govt venture Capital. Then how could they rely on large corporations to 'Finance' the minority business sector. As far as I understood, the role of large corporations was to provide mentorship and market.
I chose A through elimination since all other options were unfit.
Re: Federal efforts to aid minority businesses began in the   [#permalink] 11 Jul 2016, 17:02
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Federal efforts to aid minority businesses began in the

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