Exam 8: An Economic Analysis of Financial Structure

Managers (________)may act in their own interest rather than in the interest of the stockholder-owners (________)because the managers have less incentive to maximize profits than the stockholder-owners do.

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

One way of describing the solution that high net worth provides to the moral hazard problem is to say that it

Because of the adverse selection problem,

As a source of funds for nonfinancial businesses,stocks are relatively more important in

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

While Sarbanes-Oxley is designed to reduce the problems caused by conflicts of interest critics say that it might diminish economies of scope and

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

One financial intermediary in our financial structure that helps to reduce the moral hazard from arising from the principal-agent problem is the

A conflict of interest arises in investment banking because the banks are attempting to simultaneously serve two client groups

A clause in a mortgage loan contract requiring the borrower to purchase homeowner's insurance is an example of a

A lesson of the Enron collapse is that government regulation

The Global Legal Settlement of 2002 required investment banks to separate ________ and ________.

A conflict of interest can occur for accounting firms when the firms both

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

The "lemons problem" exists because of

Although debt contracts require less monitoring than equity contracts,debt contracts are still subject to ________ since borrowers have an incentive to take on more risk than the lender would like.

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

The Sarbanes-Oxley Act of 2002 increased supervisory oversight by

What three types of financial service activities have led to serious conflict of interest problems in financial markets in recent years?