Quiz_3_Review[1]

Quiz_3_Review[1] - Quiz 3 Review Expectations Bring Green...

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Expectations Bring Green Scranton Pencil Calculator 1 Sided Cheat Sheet Allowed Have 1:25 minutes to take the quiz. 30 questions Chapters 15, 17, 18, 20 Questions based on questions discussed in class and posted on ilearn and homework questions. Bailout Know difference between liquidity crisis and insolvency. Understand how the smelly asset affects whether company is in a liquidity crisis or not. Chapter 15 Definitions and examples of: a. Adverse selection b. Moral Hazard: Principal agent problem Lemons Problem: Average of low and high quality cars. Tools to solve adverse selection: 1. Private Production and Sale of Information 2. Government Regulation to Increase Information 3. Financial Intermediation 4. Collateral and Net Worth Tools to Help Solve the Principal-Agent Problem 1. Production of Information: Monitoring 2. Government Regulation to Increase Information 3. Financial Intermediation (e.g, venture capital) 4. Debt Contracts Financial Crises 1. Increases in Interest Rates
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Quiz_3_Review[1] - Quiz 3 Review Expectations Bring Green...

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