Discuss the role of trust as a critical piece of any principal-agent situation. In particular, what role did trust play in the recent stock market scandals?
The main problem in a principal-agent situation is that the agents cannot always be trusted. They may put their own interests ahead of those of their principals, in clear dereliction of duty. Recent stock market scandals in which managements having betrayed stockholders and employees while obtaining hundreds of millions of dollars in bonuses for themselves are evidence of the pattern of behavior associated with the principal-agent situation.
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Refer to Game Matrix IV. The Nash Equilibrium for the game is
Game Matrix IV
The following questions refer to the game matrix below.
Player A can play the strategies UP and DOWN and Player B can play the strategies LEFT and RIGHT.
a. UP, LEFT
b. UP, RIGHT
c. DOWN, LEFT
d. DOWN, RIGHT
Use the following information to answer the next question.SecurityAmount (in billions)Treasury bills$220Corporate bonds140Treasury notes80Corporate stock200U.S. savings bonds60Treasury bonds100The public debt for the economy is
A. $540 billion. B. $460 billion. C. $580 billion. D. $400 billion.
During 1991, Argentina's monetary law had a currency board. Explain and give an example
What will be an ideal response?
Suppose the required reserve ratio is 5 percent and the Fed buys a $10,000 bond. If money is deposited into a commercial bank, what will initially happen to money supply?
a. It will increase by $10,000. b. It will increase by $5,000. c. It will increase by 5 percent. d. It will increase by $200,000.