Which one of the following statements regarding the loans market is false? a) The principal-agent problem leads to credit rationing in the loans market b) One solution for the principal-agent problem in loans is for the borrower to provide equity or collateral c) Credit rationing increases inequality d) The principal-agent problem in loans can not be resolved by writing a binding contract for the borrower to exert full effort e) The principal-agent problem exists in loans due to a positive possibility of the agent not being repai
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Which one of the following statements regarding the loans market is false?
a) The principal-agent problem leads to credit rationing in the loans market
b) One solution for the principal-agent problem in loans is for the borrower to provide equity or collateral
c) Credit rationing increases inequality
d) The principal-agent problem in loans can not be resolved by writing a binding contract for the borrower to exert full effort
e) The principal-agent problem exists in loans due to a positive possibility of the agent not being repai
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