WhichofthefollowingstatementsconcerningexternalsourcesoffinancingfornonfinancialbusinessesintheUnitedStatesaretrue?
A. Bondsareafarmoreimportantsourceoffinancethanarestocks.
B. Stocksandbonds,combined,supplymorethanone-halfoftheexternalfunds.
C. Financialintermediariessuchasbanksarearelativelyunimportantsourceofexternalfunds.
D. Only(a)and(b)oftheabove.
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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.
Theproblemcreatedbyasymmetricinformationbeforethetransactionoccursiscalled_____,whiletheproblemcreatedafterthetransactionoccursiscalled_____.
A. adverseselection;moralhazard
B. moralhazard;adverseselection
C. costlystateverification;free-riding
D. free-riding;costlystateverification