eco349 fall 2013 mid mc

A free riding b governmentregulation c

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Unformatted text preview: d reflect market fundamentals, which of the 22) ______ following is a false statement? A) A stock that has done poorly in the past is more likely to do well in the future B) Security prices can be used by managers to assess their cost of capital accurately C) A securityʹs price reflects all available information about the intrinsic value of the security D) One investment is as good as any other because the securitiesʹ prices are correct 23) The remedies for the adverse selection include all but the following. A) free-riding B) government regulation C) private production and sale of information D) financial intermediation 24) A problem for equity contracts is a particular type of ________ called the ________ problem. A) adverse selection; free-rider B) moral hazard; free-rider C) moral hazard; principal-agent D) adverse selection; principal-agent 25) A debt contract is incentive compatible ________. A) if the borrowerʹs net worth is sufficiently low so that the lenderʹs r...
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