Decrease in price of a substitute. Increase in price of a complement. Decrease in income if good is normal good.
Answer: TRUE
Explanation: Moral hazard refers to the situation when an individual starts taking avoidable risk unnecessarily when he or she is aware of the fact that any potential loss will be bore by the third party and not him.
Thus, if the manager is taking more and more risk knowing that they are insured is a clear example of moral hazard. Hence, the given statement is true.
The answer that best fits the blank provided above is A SUBORDINATED DEBENTURE. Subordinated debenture is also known as subordinated debt. This kind of debt that ranks just below other loans whenever the company files bankruptcy. This is what is received instead of the liquidation proceeds.
Answer:
9.94%(Approx).
Explanation:
Retention ratio=1- payout ratio
=1-0.32
=0.68
Sustainable growth rate=(ROE*Retention ratio)/[1-(ROE*Retention ratio)]
=(0.133*0.68)/[1-(0.133*0.68)]
=0.09044/0.90956
=9.94%(Approx).