Exam 9: Transactions Costs, asymmetric Information, and the Structure of the Financial System

Suppose some members of Enron's board of directors are aware of the company's true financial condition,information that is not available to most investors.This is an example of

Financial intermediaries reduce transactions costs by

Lenders prefer to lend to firms with high net worth because

Crowdfunding can best be described as

Initially,the securities traded in the financial markets established in the 1790s were primarily

Which of the following is NOT a company that collects information on individual borrowers and sells it to savers?

How does adverse selection in financial markets affect the method by which firms raise funds?

Which of the following is the most likely result of financial intermediaries?

Requirements for information disclosure for firms that desire to sell securities in financial markets

All of the following are consequences of adverse selection on good firms EXCEPT

Private information-collection firms fail to eliminate the adverse selection problem because

How can restrictive covenants help to reduce moral hazard in bond markets?

The best measure economists have of how successful a country is in providing a high standard of living to its residents is

The use of collateral

The presence of information and transactions cost result in all of the following EXCEPT

With debt financing

Smaller firms tend to rely on financial intermediaries instead of financial markets for external financing due to

Acme Widget tells investors it wants to build a new widget factory and sell investors $10,000,000 in bonds to finance it.Once they have raised the $10,000,000 the owners of Acme Widget use the funds to finance a trip to Atlantic City to try out a new scheme they have devised to win at blackjack.This is an example of

Which of the following is the most important source of external financing for corporations?

Restrictive covenants