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Question: Consider a project that needs a fixed investment I = $100 and yields a gross return y > I with certainty. A risk-neutral borrower wants to invest in this project, but she only has private wealth w = $58 that can be used for investment. She has the option to go to a risk neutral and competitive bank in order to borrow the rest of the money that she Why Intervene in Credit Markets?
needs to carry out her investment project, (I - w). Once the project has yielded a positive return, the borrower can either run away with the money or repay her debt. The lender can observe the result of this particular investor's project with probability s = 0.7. If the borrower refuses to repay the money and the bank observes that the project has been successful, the bank can seize w. Explain whether you would expect the bank to be repaid in this ex post moral hazard scenario and why. (For the sake of simplicity, you can assume that the cost of raising capital for the bank is zero per each dollar lent.)
Auditor's Opinion on the Occurrence of Fraud. Sundback, CGR, is the auditor for Upseerin Manufacturing, a privately owned company in Espoo, Finland.
Explain how the circuit could be modified to produce a 5% ripple voltage.
Suppose the production of a certain quantity of a good has a certain cost. Can you think of a situation in which producing more of the good costs less?
Glen spends at least 40 hours a week at his place of business. If he closed the company, he could work for his competitor earning $50,000 a year. He also owns the building the company operates in and could rent it out for $12,000 a year if he closed ..
What are the main problems of using headcount ratio and income gap as poverty measures in a region?
New EPA regulations have just been proposed. If they are enacted, the capacity of the hydrogen sulfide removal plant that is part of a coal facility.
Suppose that the matching function is given by: M = em(Q, A) = eQ^(0.7)A^(0.3) Express pc and pf as functions of e and labor market tightness j. Suppose that by law the wage is increased (while keeping all the parameters from part (c) unchanged). Wha..
What difference does it make, if any, if technology is moving very fast in the market so that this game proves to be one-time-only simultaneous play?
Which of the following is not a characteristic of capitalism?
Does it seem likely that score and class would have a deterministic relationship? That is, is it realistic to think that once you know the size of a student's graduating class you know, with certainty, his or her test score? Explain.
Discuss the welfare effects of four possible policies: price floor, price support, production quota and voluntary production reduction. Which policy is least efficient? Discuss the differences in the benefits to farmers and the cost to the governme..
Determine the degree of operating leverage at an output of 400,000 barrels.
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