Exam 8: An Economic Analysis of Financial Structure

The ________ problem helps to explain why the private production and sale of information cannot eliminate ________.

The problem created by asymmetric information before the transaction occurs is called ________,while the problem created after the transaction occurs is called ________.

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

Because of the adverse selection problem,

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.

The recent Enron and Tyco scandals are an example of

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

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

A ________ is a provision that restricts or specifies certain activities that a borrower can engage in.

Net worth can perform a similar role to

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

One possible reason for slower growth in developing and transition countries is

American businesses get their external funds primarily from

Since they require less monitoring of firms,________ contracts are used more frequently than ________ contracts to raise capital.

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

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

The concept of adverse selection helps to explain

Credit card debt is

Of the sources of external funds for nonfinancial businesses in the United States,stocks account for approximately ________ of the total.