Exam 8: An Economic Analysis of Financial Structure

Regulation of the financial system ________.

That most used cars are sold by intermediaries (i.e.,used car dealers)provides evidence that these intermediaries ________.

Canadian businesses used stocks for external financing ________ percent over the 1970 - 2002 period.

The analysis of how asymmetric information problems affect economic behavior is called ________ theory.

Why does the free-rider problem occur in the debt market?

Canadian businesses get their external funds primarily from ________.

In the absence of asymmetric information,the lemons problem ________.

The current structure of financial markets can be best understood as the result of attempts by financial market participants to ________.

Stocks and bonds supply less than ________ of the external funds corporations need to finance their activities.

Which of the following statements concerning external sources of financing for nonfinancial businesses in Canada is true?

Property that is pledged to the lender in the event that a borrower cannot make his or her debt payment is called ________.

Equity contracts ________.

High net worth helps to diminish the problem of moral hazard problem by ________.

The two ways financial intermediaries can reduce transactions costs are ________ and ________.

Analysis of adverse selection indicates that financial intermediaries,especially banks,________.

Solutions to the moral hazard problem include ________.

Adverse selection ________.

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

A borrower who takes out a loan usually has better information about the potential returns and risk of the investment projects he plans to undertake than does the lender.This inequality of information is called ________.

Collateralized debt is also know as ________.