Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question: Consider a village inhabited by 3 risk-neutral individuals: a borrower, an inside lender, and an outside lender. The first two are part of a credit cooperative. The borrower wants to invest in a project that costs K = $100. If she exerts effort, the project will be successful with probability 0.9 and will yield a return of y = $240. Otherwise, the project fails and her return is zero. If she "shirks" (i.e., if she does not put in enough effort), her probability of success is only 0.5. The cost of her effort is e = $30. The inside lender can lend at most b = $60 to be used as investment with a gross interest rate R = 160%. The outside lender will lend the rest of the funds needed to start the project at a gross interest rate of R = 210%. In case of default, the outside lender can seize an amount ? = $50 offered as collateral by the inside lender. As she is interested in the result of the project, the inside lender can choose whether to monitor the behavior of the borrower, which would imply a monitoring cost of P = $20. If she monitors, she knows the behavior of the borrower. In the event that misbehavior is discovered, the borrower will then be punished and incur a penalty equivalent to A = $9. Assume that all agents are rational, and that they understand the following time line: lending takes place first; then monitoring decisions are made; choices about effort are made next; and, finally, returns are realized and the borrower decides whether or not to repay.
a. What strategies will the borrower and the inside lender choose and why?
b. Will these strategies change if the inside lender increases the interest rate to R = 200%? Briefly explain your answer.
What are the various factors used in classifying commodities for tariff purposes?
Would you recommend it to increase or decrease price, ignoring the cost of production? What effect would your answer have on ferrari's brand?
Describe the monetary policy tools the Federal Reserve uses to stabilize the economy and maintain price stability. Based on the information you researched from Federal Reserve publications, present and justify your own economic outlook for the next..
Deep global recession might trigger changes in expending from imported items to domestically manufactured items. What are at least two policies that governments might implement to increase expending on domestic items.
An inverse relationship that was identified is that as the number of treatments increased, the existence of the cancer decreased. What are other inverse relationships you can identify associated with this study?
macro-environment factors: identify the relevant segments and trends in the demographic, economic, regulatory, socio-cultural and technological environment;
A market has the following characteristics: there are many firms, few barriers to entry, each firm acts independently with differentiated products, and no possible long-run economic profit. The difference between a perfectly competitive firm and a ..
What is its product or means of revenue and who are its customers? Is it location based and physical, or does it have a mostly virtual presence?
An average worker in Brazil can produce an ounce of soybeans in 20 minutes and an ounce of coffee in 60 minutes, while an average worker in Peru can produce an ounce of soybeans in 50 minutes and a ounce of coffee in 75 minutes. Who has the absolu..
What would likely happen to overall economic growth if everybody made the same wage no matter what they did? What does this tell us about income inequality
The aggregate demand curve slopes decrease, because when the price level is reduce, people can afford to purchase more, and aggregate demand increase.
Identify and describe the strengths and weaknesses of the research method used in both research articles in this week's resources. Use a separate copy of the Journal Club Template for Quantitative Research to enter this information for each resear..
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd