What could you do to prevent moral hazard after employees

Reference no: EM131267066

Economic Bunting: Asymmetric Information, More

You are manager of Dave's FunTime Bar and Grill.

1. Why would you worry about adverse selection when hiring new bartenders and servers? What could you do to prevent adverse selection when hiring these employees?

2. Why would you worry about moral hazard after hiring new bartenders arid servers? What could you do to prevent moral hazard after hiring these employees?

3.How can the existence of adverse selection and moral hazard explain the principle agent problem?

Given the following information for Eagle Bank: Equity 20, Securities 70, Savings deposits 10,

Personal Loans 40, Retained earnings 20, Time deposits 30, Home mortgages 60, Demand deposits 100.

Do the following:

1. Setup the balance sheet for Eagle Bank when reserve requirement are 10%.
2. Suppose a loan of 10 defaults. Show the adjustments in the balance sheet
3. Suppose there is a demand deposit withdrawal of 40. List three balance sheet management activities that might be taken to balance Eagle's accounts. Show the effects of these activities on separate balance sheets.
4. Rank the activities by most desirable to least desirable, providing reasons for the ranking.

Reference no: EM131267066

Questions Cloud

Total expenditure on beef after the price change : The price of all other goods remains constant while the price of beef increases by 4%. You respond by reducing your demand for beef by 2%. Is your demand for beef elastic or inelastic? What happens to your total expenditure on beef after the price..

Calculate the pressure at each node : The hydraulic grade line throughout the system.

Market demand for monopolist product : Consider a monopolist described by the following equations: Market demand for monopolist's product: P = 100 - Q

Evaluate the role of an executive level bpm group : Evaluate the role of an Executive Level BPM Group. Who would be members of that group and how is this group responsible for reducing resistance to change

What could you do to prevent moral hazard after employees : Why would you worry about moral hazard after hiring new bartenders arid servers? What could you do to prevent moral hazard after hiring these employees?

Competitive industry with long-run economic costs : The treadmill market is a competitive industry with long-run economic costs. Provided the following information, what is the long-run equilibrium price in this industry?

Create an array function - generate random numbers : Generate random numbers, report total number created, how many were 15, 16, or 17 and report this information to the user.

What are the expected outcomes when using each kind : What are the differences in types of data / information among the three venues? What are the expected outcomes when using each kind? For example, does using available data enable one to determine cause and effect? Which venue utilizes narrative and..

Product in a competitive market : A firm is selling a product in a competitive market at a price of $50 per unit. Using the information below regarding cost, what are the firm's profits?

User Account

All Pages