WhichofthefollowingstatementsconcerningexternalsourcesoffinancingfornonfinancialbusinessesintheUnitedStatesaretrue?
A. Bondsareafarmoreimportantsourceoffinancethanarestocks.
B. Stocksandbonds,combined,supplymorethanone-halfoftheexternalfunds.
C. Financialintermediariessuchasbanksarearelativelyunimportantsourceofexternalfunds.
D. Only(a)and(b)oftheabove.
WhichofthefollowingstatementsconcerningexternalsourcesoffinancingfornonfinancialbusinessesintheUnitedStatesaretrue?
A. Financialintermediariessuchasbanksarethemostimportantsourceofexternalfunds.
Bondsareafarmoreimportantsourceoffinancethanarestocks.
C. Stocksandbonds,combined,supplylessthanone-fifthoftheexternalfunds.
D. Only(a)and(b)oftheabove.
Aborrowerwhotakesoutaloanusuallyhasbetterinformationaboutthepotentialreturnsandriskoftheinvestmentprojectsheplanstoundertakethandoesthelender.Thisinequalityofinformationiscalled
A. moralhazard.
B. asymmetricinformation.
C. noncollateralizedrisk.
D. adverseselection.
Ifbadcreditrisksaretheoneswhomostactivelyseekloansand,therefore,receivethemfromfinancialintermediaries,thenfinancialintermediariesfacetheproblemof
A. moralhazard.
B. adverseselection.
C. free-riding.
D. costlystateverification.