Homework Help is Here – Start Your Trial Now!
Business
Finance
Question 32 The phrase, "bad risks drive good risks out of the market" refers to the effect of which of the following? O a. Arbitrage

Question 32 The phrase, "bad risks drive good risks out of the market" refers to the effect of which of the following? O a. Arbitrage

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

 E4

Question 32 The phrase, "bad risks drive good risks out of the market" refers to the effect of which of the following? O a. Arbitrage Ob. Transactions costs. O c. Adverse selection O d. Moral hazard Oe. None of the above. Question 33 Which of the following can best explain the reasons for the particular structures of financial systems in the U.S. and other countries? O a. Mispricing of risk by financial investors O b. Transactions and information costs O c. Arbitrage activities of investors O d. Lax banking regulations Oe. None of the above.
Transcribed Image Text:Question 32 The phrase, "bad risks drive good risks out of the market" refers to the effect of which of the following? O a. Arbitrage Ob. Transactions costs. O c. Adverse selection O d. Moral hazard Oe. None of the above. Question 33 Which of the following can best explain the reasons for the particular structures of financial systems in the U.S. and other countries? O a. Mispricing of risk by financial investors O b. Transactions and information costs O c. Arbitrage activities of investors O d. Lax banking regulations Oe. None of the above.
Question 30 The U.S. financial data indicate that: O a. Stocks are more important sources of external financing for businesses compared to bonds. O b. Stocks and bonds combined are more important sources of external financing for businesses compared to loans from financial intermediaries. O c. Loans from financial intermediaries are more important sources of external financing for businesses compared to stocks and bonds. O d. Bank loans are more important sources of external financing for businesses compared to nonbank loans. Oe. None of the above statements is generally true. Question 31 Which of the following statements is generally true (in the era of scarce reserves)? O a. If the Fed tries to stabilize the federal funds rate, the total amount of federal funds (bank reserves) will also become more stable. b. If the Fed tries to stabilize the total amount of federal funds (bank reserves), the federal funds rate will also become more stable. O c. If the Fed tries to stabilize the federal funds rate, the total amount of federal funds (bank reserves) will become more unstable. O d. If the Fed tries to stabilize the federal funds rate, the short-term interest rates will become more unstable. Oe. If the Fed tries to stabilize the total amount of federal funds (bank reserves), both M1 and M2 money supplies will become more unstable.
Transcribed Image Text:Question 30 The U.S. financial data indicate that: O a. Stocks are more important sources of external financing for businesses compared to bonds. O b. Stocks and bonds combined are more important sources of external financing for businesses compared to loans from financial intermediaries. O c. Loans from financial intermediaries are more important sources of external financing for businesses compared to stocks and bonds. O d. Bank loans are more important sources of external financing for businesses compared to nonbank loans. Oe. None of the above statements is generally true. Question 31 Which of the following statements is generally true (in the era of scarce reserves)? O a. If the Fed tries to stabilize the federal funds rate, the total amount of federal funds (bank reserves) will also become more stable. b. If the Fed tries to stabilize the total amount of federal funds (bank reserves), the federal funds rate will also become more stable. O c. If the Fed tries to stabilize the federal funds rate, the total amount of federal funds (bank reserves) will become more unstable. O d. If the Fed tries to stabilize the federal funds rate, the short-term interest rates will become more unstable. Oe. If the Fed tries to stabilize the total amount of federal funds (bank reserves), both M1 and M2 money supplies will become more unstable.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Foreign Exchange Market
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS