Exam 8: An Economic Analysis of Financial Structure

Credit card debt is

If you default on your auto loan,your car will be repossessed because it has been pledged as ________ for the loan.

Because of the "lemons problem" the price a buyer of a used car pays is

One way of describing the solution that high net worth provides to the moral hazard problem is to say that it

Government regulations require publicly traded firms to provide information,reducing

The analysis of how asymmetric information problems affect economic behavior is called ________ theory.

Because of the adverse selection problem,

Government regulations designed to reduce the moral hazard problem include

Analysis of adverse selection indicates that financial intermediaries,especially banks,

Commercial and farm mortgages,in which property is pledged as collateral,account for

High net worth helps to diminish the problem of moral hazard problem by

The high growth rate in China in the last twenty years has similarities to the high growth rate of ________ during the 1950s and 1960s.

Collateralized debt is also know as

Although debt contracts require less monitoring than equity contracts,debt contracts are still subject to ________ since borrowers have an incentive to take on more risk than the lender would like.

A lesson of the Enron collapse is that government regulation

The "lemons problem" exists because of

For restrictive covenants to help reduce the moral hazard problem they must be ________ by the lender.

American businesses get their external funds primarily from

With regard to external sources of financing for nonfinancial businesses in the United States,which of the following are accurate statements?

A problem for equity contracts is a particular type of ________ called the ________ problem.