Why Might a Government Intervene in a Fully Sustainable MFI

question 22

Multiple Choice

Why might a government intervene in a fully sustainable MFI?

• A) Being profitable doesn't guarantee the credit services are being supplied in a socially optimum way
• B) To save scarce resources for other purposes
• C) To add competition to existing commercial banks
• D) To avoid bankruptcy

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Definitions:

Capitalization

The total market value of all of a company's outstanding shares, calculated by multiplying the share price by the total number of shares.

Profit Rate

The ratio of profit generated to the amount of capital or funds invested over a certain period, often expressed as a percentage.

Capitalization

It refers to the sum of a company's outstanding shares multiplied by its current market price, often used to gauge a company’s size and market value.

Net Investment

Net Investment refers to the total amount spent on purchasing new capital assets minus the proceeds from the sale of old or obsolete assets.