Because of the adverse selection problem, Select one: a good credit risks are more likely to seek loans causing lenders to make a disproportionate Incorrect amount of loans to good credit risks b. lenders are reluctant to make loans that are not secured by collateral C. lenders will write debt contracts that restrict certain activities of borrowers d. lenders may refuse loans to individuals with high net worth, because of their greater proclivity to "skip town"
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- Can a debtor be put in delay and consequently, incur liability even without demand from creditor? explainUnder the Consideration clause in a Major Medical policy, he insurance company's consideration to an insured is he promise to A.renew the policy annually on payment of premium B.pay benefils as staled in the policy C.return the premiums paid for up to 6 months after the effective dale if lhe insured is dissalisfied with the policy D.waive the Inconteslable clauseA bank that provides financing for the purchase of an auto may require the insured to name the bank on an auto policy to this situation, the bank would have A fiduciary responsibility to the insurer An insurable interest in the auto A surety interest in the auto Rights of subrogation
- Which of the statements about subprime lending is false? Before the 2008 financial crisis, financial institutions increased the number of subprime loans they issued as home prices continued to rise. If a home owner is unable to afford the mortgage payments, the homeowner can always pay off the mortgage by selling the home. Subprime lending occurs when financial institutions issue loans to individuals who are less likely to be able to repay their loan than individuals who meet a set of standards. The risks associated with subprime lending increase as the likelihood of falling home prices increase.Explain the problems of adverse selection and moral hazard caused by asymmetricinformation. How can financial intermediaries alleviate those problems?(b) Explain the Diamond model of delegated monitoring7) Because of the adverse selection problem, A) good credit risks are more likely to seek loans, causing lenders to make a disproportionate amount of loans to good credit risks. B) lenders may refuse loans to individuals with high net worth, because of their greater proclivity to "skip town." C) lenders are reluctant to make loans that are not secured by collateral. D) all of the above.
- Bryan has applied for a mortgage with Bank of Amen. The bank is reviewing the amount of Bryan's monthly income that is used to pay his monthly debt to determine the level of risk in offering him a mortgage. Which of the following concepts characterizes the basic components of a credit score being utilized by the bank? A payment history B debt-to-income ratio с available credit D length of credit historyIn your opinion, what strategies or measures could be implemented to reduce income tax cheating and promote more accurate reporting?Discuss the Benefits and Costs of Delinquency for: Microfinance Institutions Borrower In the field of lending
- Recognize adverseselection and summarize the ways in whichit can be reduced.Reinsurer A enters into a quota share agreement with primary insurer P - In this quota share arrangement, P retains 70% of the losses and A assumes 30% of the losses. In a given year, P writes $500 Million of premiums and incurs losses of $100 Million Select all that apply P's share of premiums is $150 Million and P's share of losses is $30 Million. A's share of premiums is $350 Million and A's share of losses is $70 Million P's share of premiums is $350 Million and P's share of losses is $70 Million A's share of premiums is $150 Million and A's share of losses is $30 MillionFinancial intermediaries are firms that: match buyers and sellers of bonds. O conduct open market operations. match buyers and sellers of stocks. extend credit to borrowers using funds from savers.