One financial intermediary in our financial structure that helps to reduce the moral hazard from arising from the principal-agent problem is the
A) venture capital firm.
B) money market mutual fund.
C) pawn broker.
D) savings and loan association.
A
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Jerry is interested in purchasing a washing machine. The price of the machine is $500. The probability that the machine will break down is 20% every year
If the machine breaks down in the first year and Jerry holds a warranty, he receives a new washing machine worth $400 that year. If the machine breaks down after two years and he holds a warranty, he receives a new machine that is worth $300 after the second year. The price of a warranty for two years is $100. The market interest rate is 5%. Is buying the warranty a good investment for Jerry? Explain your answer. Show all the necessary calculations.
Which are the two ways in which people can help charitable causes?
What will be an ideal response?
Most economic historians believe that:
A. the gold standard didn't play a major role in the Great Depression. B. countries that held on to the gold standard recovered from the Great Depression the quickest. C. the gold flows played a central role in spreading the Great Depression. D. if more countries would have been on the gold standard the Great Depression would have been averted.
Suppose that the price elasticity of supply is 0.5 and the price increases by 4%. We would predict:
A. an 8% increase in quantity supplied. B. a 2% increase in quantity supplied. C. a 0.8% increase in quantity supplied. D. a 0.2% increase in quantity supplied.