The Government's Role in a Developing Country Is Important During

question 88

Multiple Choice

The government's role in a developing country is important during the country's development process for all of the following reasons EXCEPT

• A) building social overhead capital cannot be taken on by the private sector.
• B) building infrastructure is a huge project that only the government can undertake.
• C) many social projects are associated with the free-rider problem, which minimizes the rate of return to the private sector.
• D) the government is the only institution with a vested interest in a country's development.

---

Definitions:

Convertible Bonds

Bonds issued by a corporation that can be converted into a predetermined number of shares of the company's stock.

Participating Preferred Stock

Preferred shares that offer the holder the advantage of receiving dividends equal to the common shares when the company performs well financially.

Mandatorily Redeemable

Describes financial instruments or securities that the issuer is obligated to buy back from holders at a predetermined date or upon the occurrence of certain events.

Preferred Stock

Preferred stock is a type of stock that affords its holders preferential payments of dividends or distributions, and often has priority over common stock in the event of a liquidation.