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Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer?.

Solutions for Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for GMAT. Download more important topics, notes, lectures and mock test series for GMAT Exam by signing up for free.

Here you can find the meaning of Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Directions: Read the passage carefully and answer the question as follow.Federal efforts to aid minority businesses began in the1960’s when the Small Business Administration (SBA)began making federally guaranteed loans and govern-ment-sponsored management and technical assistance(5) available to minority business enterprises. While thisprogram enabled many minority entrepreneurs toform new businesses, the results were disappointing,since managerial inexperience, unfavorable locations,and capital shortages led to high failure rates. Even 15(10) years after the program was implemented, minority business receipts were not quite two percent of the nationaleconomy’s total receipts.Recently federal policymakers have adopted anapproach intended to accelerate development of the(15) minority business sector by moving away from directlyaiding small minority enterprises and toward supportinglarger, growth-oriented minority firms through interme-diary companies. In this approach, large corporationsparticipate in the development of successful and stable(20) minority businesses by making use of government-sponsored venture capital. The capital is used by aparticipating company to establish a Minority EnterpriseSmall Business Investment Company or MESBIC. TheMESBIC then provides capital and guidance to minority(25) businesses that have potential to become future suppliersor customers of the sponsoring company.MESBIC’s are the result of the belief that providingestablished firms with easier access to relevant manage-ment techniques and more job-specific experience, as(30) well as substantial amounts of capital, gives those firmsa greater opportunity to develop sound business founda-tions than does simply making general managementexperience and small amounts of capital available.Further, since potential markets for the minority busi-(35) nesses already exist through the sponsoring companies, the minority businesses face considerably less risk interms of location and market fluctuation. Followingearly financial and operating problems, sponsoringcorporations began to capitalize MESBIC’s far above(40) the legal minimum of $500,000 in order to generatesufficient income and to sustain the quality of manage-ment needed. MESBIC’c are now emerging as increas-ingly important financing sources for minority enter-prises.(45) Ironically, MESBIC staffs, which usually consist ofHispanic and Black professionals, tend to approachinvestments in minority firms more pragmatically thando many MESBIC directors, who are usually seniormanagers from sponsoring corporations. The latter(50) often still think mainly in terms of the “social responsi-bility approach” and thus seem to prefer deals that areriskier and less attractive than normal investment criteriawould warrant. Such differences in viewpoint have pro-duced uneasiness among many minority staff members,(55) who feel that minority entrepreneurs and businessesshould be judged by established business considerations.These staff members believe their point of view is closerto the original philosophy of MESBIC’s and they areconcerned that, unless a more prudent course is fol-lowed, MESBIC directors may revert to policies likelyto re-create the disappointing results of the original SBAapproach.Q.The author refers to the “financial and operating problems”(line 38 ) encountered by MESBIC’s primarily in order toa)broaden the scope of the discussion to include the legal considerations of funding MESBIC’S through sponsoring companiesb)call attention to the fact that MESBIC’s must receive adequate funding in order to function effectivelyc)show that sponsoring companies were willing to invest only $500,000 of government-sponsored venture capital in the original MESBIC’sd)compare SBA and MESBIC limits on minimum funding e)refute suggestions that MESBIC’s have been only marginally successfulCorrect answer is option 'B'. 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