Exam 8: An Economic Analysis of Financial Structure

External financing by ________ should be more important in developing countries than in industrialized countries because information about private firms is more difficult to collect in developing countries.

Net worth can perform a similar role to

Which of the following is not one of the eight basic puzzles about financial structure?

Adverse selection is a problem associated with equity and debt contracts arising from

How does a mutual fund lower transactions costs through economies of scale?

In the United States,the government agency requiring that firms that sell securities in public markets adhere to standard accounting principles and disclose information about their sales,assets,and earnings is the

One purpose of regulation of financial markets is to

Professional athletes often have contract clauses prohibiting risky activities such as skiing and motorcycle riding.These clauses are

Which of the following statements concerning external sources of financing for nonfinancial businesses in the United States are true?

The problem faced by the lender that the borrower may take on additional risk after receiving the loan is called

The reduction in transactions costs per dollar of investment as the size of transactions increases is

Regulation of the financial system

Solutions to the moral hazard problem include

Which of the following is not a benefit to an individual purchasing a mutual fund?

Direct finance involves the sale to ________ of marketable securities such as stocks and bonds.

One reason China has been able to grow so rapidly even though its financial development is still in its early stages is

Of the sources of external funds for nonfinancial businesses in the United States,corporate bonds and commercial paper account for approximately ________ of the total.

Although restrictive covenants can potentially reduce moral hazard,a problem with restrictive covenants is that

By bundling share purchases of many investors together mutual funds can take advantage of economies of scale and thereby lower

The name economists give the process by which stockholders gather information by frequent monitoring of the firm's activities is