A bank givesa mortgage loan to a home-buyer but afterward, cannot properly monitor if the home-buyer is able to keep his job to be able to repay the loan. This Select one: a. creates moral hazard problem faced by the home-buyer. O b. generates more trustworthy relationship between the bank and the home-buyer. Oc. creates moral hazard problem faced by the bank. O d. encourages good, safe behaviour on the part of the home-buyer.

A bank givesa mortgage loan to a home-buyer but afterward, cannot properly monitor if the home-buyer is able to keep his job to be able to repay the loan. This Select one: a. creates moral hazard problem faced by the home-buyer. O b. generates more trustworthy relationship between the bank and the home-buyer. Oc. creates moral hazard problem faced by the bank. O d. encourages good, safe behaviour on the part of the home-buyer.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter19: The Basic Tools Of Finance

Section: Chapter Questions

Problem 4CQQ

See similar textbooks

Similar questions

Why is there asymmetric information in the labor market? What signals can an employer look for that might indicate file traits they are seeking in a new employee?
RISKS'R'US Insurance Company, who Brenda has her home insured with, became insolvent the same day her house was struck by lightning. Damage to her home was $7,500. What is the best thing for Brenda to do now? Select one: O a. Become a bag lady. O b. Try to collect something from the reinsurance companies RISKS'R'uS has treaties with. O c. Pay the damages herself. O d. Sue RISKS'R'US for payment like their other creditors. e. Try to collect something from her states' guaranty fund.
3. Assume that the seller knows the quality and the value of a used good but that the buyer does not. Assume that the seller knows his product is of a bad quality. Assume that this good, if in good quality, is worth 10 000 (for the seller and the buyer) and if it is in bad shape, is worth only 1 000 (for the seller and the buyer). A) Now assume that most of the units on the used market are good quality. What has to be the minimum proportion of good quality products in the market such that the seller can obtain 6 000 for his good.
5 2.Asymmetric Information. Now let’s examine the impact of asymmetric information on thecreditmarket equilibrium. Specifically, in this question we assume that Anderson is not able toobserveor enforce the project that the borrower chooses. As a result, the loan contract can onlyspecifythe interest rate (not the project). Everything else remains as in problem 1.a.What type of asymmetric information problem does Anderson face? Write a shortexplanation justifying your answer.
Which of the following statements regarding immunization is correct? OA. If a bank perfectly matches the maturities of the assets and liabilities, it should achieve perfect immunization for equityholders against interest rate risk. O B. Banks can immunize their portfolios by matching the maturities of their assets with their liabilities. OC. If banks need to satisfy regulatory requirements, they are required to match the durations of their assets with the leverage- adjusted durations of their liabilities. OD. If a bank immunizes a portfolio of its assets or liabilities against interest rate risk, the bank expects that the portfolio will neither gain nor lose its value when interest rates fluctuate.
17. Passports for all Canadians, regardless of age, are valid for 10 years. O True O False 18. Canadians intending to visit China require a passport that is valid for at least six months beyond the date of the expected departure from the country. Jhy O True O False 19. Children under 16 years of age are not required to have their own passport. Adding a child's name to a parent's passport is sufficient. O True O False
21 of 38 Which of the following items is not a tool used to solve moral hazard problems? O A. Taxation. O B. Collateral. O C. Financial intermediation. O D. Monitoring and enforcement of restrictive covenants. Unsure
View History Bookmarks Profiles Tab Window Help E Inform I The va 8 Com G Home M Docun E Info pup O Dashb E operat O McGra Lectur ructure.com/courses/169731/external_tools/retrieve?display=full_width&url=https%3A%2F%2Funcc.quiz-Iti-iad-prod. 1 point When Target charges $95 for a children's game, they sell 100 units. When they charge $84, they sell 120 units. If they were to give away the game for free, how many units (Q) would be demanded? (Answer is NOT infınity) Enter as a value. ROUND TO THE NEAREST WHOLE NUMBER. Type your answer. Previous informative paper.pdf Ch4-ProjectMg...pptx Ch7&8-Manufa.pptx 25 ttv 20 F9 DOO ES #3
What is the main advantage for an LLC or Corporation? Select one: O a. taxes O b. to avoid personal liability O C. to raise capital O d. easy to create
9:48 O O 90% iwe-nnoq-seu ► PROBLEM SOLVING LA bil for a motorbort indicates a cost of P2, s00 dur in 100 deys. but promites a % tistounti Pimbursed within 30 days What is the highest umple interest rate at which the buyer can berrow money in orter to henete trom the tiscnunt? 2. The salling prica ot a TV sat it doutlu that at its net cant, It the TV sut li solit te a ustomer at a profit of 25% af the net cot, how much discount was gven to the customer? 3. A salestady's morthly come at Jessie's Department Stare s partly fied and partiaty variabke, dependng on the value uf her sales for the month When the manthly value uf her salen b P10c00.00, her montiy salary PSOL.cO. Her moothiy income increases to FLO00,00 when hur mnnthiy vales reach PIL00U D0 What must the value of her monthly sales be in order for her monthly salary to reath 4, You re buyng new televnien, From pant experience you estimate future repair cont es S00 during the fiest year, P1800 during second year, P2700 during the…
Question 20 If I pay off my entire credit card bill before this date, I do not have to pay interest on the money I have borrowed on my credit card. What is this called? O A. Forbearance period. O B. Grace period. Oc. Default. O D. Probationary period. Save and Quit DELL Ce & # 7 8. 4. e f 1. S d.
How can moral hazard lead to more costly insurance premiums than one was expected?