Collateral requirements lessen the consequences of ________ because the collateral reduces the lender's losses in the case of a loan default and it reduces ________ because the borrower has more to lose from a default
A) adverse selection; moral hazard
B) moral hazard; adverse selection
C) adverse selection; diversification
D) diversification; moral hazard
A
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When the production of a good has an external cost, the
A) marginal social cost curve lies below the marginal private cost curve. B) marginal social benefit curve lies above the marginal private benefit curve. C) equilibrium quantity in an unregulated, competitive market has a marginal social cost greater than the marginal social benefit. D) equilibrium quantity in an unregulated, competitive market has a marginal social cost less than the marginal social benefit.
It is generally claimed that state trading, or centrally controlled trading will tend to reach a lower economic welfare than would be reached by allowing market forces to determine trade flow directions and terms of trade
Illustrate a counter-example to this proposition.
In the foreign exchange market, a balance of payments deficit is represented by:
A) excess supply of dollars. B) excess demand for dollars. C) equilibrium in the foreign exchange market. D) none of the above.
The coupon equivalent yield of a one-year Treasury bill with a $1,000 face value and a current price of $970 is __________ percent
A) 3.1 B) 3.0 C) 9.7 D) None of the above.