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

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In effect, banks are able to charge

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

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Which of the following concerns were raised as a result of record low interest rates in 2012?

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Which of the following agencies has established standardized accounting principles for reporting corporate earnings?

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The purpose of collateral and restrictive covenants is to reduce ________ in debt contracts.

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Small investors face

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

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

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What are the various ways that financial intermediaries can take advantage of economies of scale?

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Symmetric information

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What are the reasons why disclosure by the SEC do not eliminate the information costs of adverse selection?

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Moral hazard problems arise when

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How are financial intermediaries able to reduce transactions costs?

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Restrictive covenants

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The main reason why banks are the leading source of external finance for businesses is

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Banks require collateral for loans in order to

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Lenders prefer to lend to firms with high net worth because

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Financial intermediaries emerged

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The "lemons problem" in the used car market arises from

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You own a 2007 Ford Explorer. Although it has high mileage, you have maintained it very well. You want to sell it, but after checking the prices other owners of 2007 Ford Explorers are able to get for their cars in the used car market, you decide the prices are too low and you decide not to sell. This is an example of

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