PrepTest 159, Section 2, Question 10
The following two passages were adapted from articles(474 more words not shown)
Passage A(253 more words not shown)
Passage B(215 more words not shown)
Which one of the following,(24 more words not shown)
- ASafeSave generally extends(8 more words not shown)
- BSafeSave has far(12 more words not shown)
- CUrban poor people(11 more words not shown)
- DThe customers that(16 more words not shown)
- ELoan repayment rates(15 more words not shown)
Reading the passage
B links SafeSave's flexible service to frequent transactions and then to faster repayment than at Grameen. Is the service really what explains the difference? Maybe the two providers have different kinds of customers.
What we’re looking for
We need a reason to question that explanation, not simply a reason to worry about lending in general. Faster repayment could have another cause even if the difference in repayment speed is real.
Working the answers
- A
Larger loans don't explain why SafeSave's customers repay faster. Loan size alone gives us no clear competing explanation of the observed difference.
- B
Having fewer clients doesn't tell us why each client's repayment is faster. We would need a connection between the smaller customer base and the result B attributes to flexibility.
- C
This compares borrowing amounts in urban and rural populations generally. It doesn't show that the relevant clients have a different ability to repay, or explain SafeSave's faster repayment.
- DCorrect
Customers who are financially better off may be able to repay faster regardless of how frequently collectors visit. That gives us another explanation for SafeSave's result. The flexible service might still help, but the comparison no longer clearly isolates its effect.
- E
Other banks' repayment rates don't explain the difference between these two providers. The claim under review concerns why SafeSave's customers repay faster than Grameen's, not whether either has the best repayment record in Bangladesh.
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