Find who is more likely to take a bigger risks

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Reference no: EM13182402

1) Whether an asset is "liquid" often depends on what situation you are in. For each of the pairs of assets below, which is more liquid in the particular setting?

You want to buy a sofa:

A savings account or currency

You want to trade for a bologna sandwich in elementary school:

A peanut butter and jelly sandwich or sushi

You want to buy a house:

Currency or a checking account

You line in a postapocalyptic wasteland:

Rice or currency

You are traveling across Europe during the Middle Ages:

Gold coins or works of art

You are an investment banker buying a corporation:

U.S. Treasury bonds or currency

2)a. Who is more likely to take a bigger risks:

A trapeze artist with a safety net beneath or a trapeze artist w/o a safety net

b. Who is more likely to take a bigger risks with his deposits:

A bank CEO in a country where there is a lender of last resort or a bank CEO in a country where there is no lender of last resort?

c. Who is more likely to spend more time searching for a well-run, safe bank:

A depositor living in a country with government-run deposit insurance or a depositor living in a country w/o government-run deposit insurance?

d. Do government-run central banks and deposit insurance both increase moral hazard problems, both decrease moral hazard problems, or do they push in different directions when it comes to moral hazard?

Reference no: EM13182402

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