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vredina [299]
3 years ago
5

One result of asymmetric information about people's ability to repay a loan is that: a bank could make many loans to people who

don't pay them back. lenders are better off than with perfect information. banks will not make loans. loans will only be made to people who don't pay them back.
Business
1 answer:
kifflom [539]3 years ago
4 0

Answer:

Option (a) is correct.

Explanation:

Asymmetric information refers to the situation in which one of two parties involved in the transaction having more information than the other party.

It is evident that an asymmetric information is associated with all types of economic transaction. It is mostly associated with the insurance industry and banking industry.

In our case, banks have less information about the borrower's loan repaying capability and could make many loans to the people who will be the defaulters.

There are two problems arises from the asymmetric information:

(i) Moral hazard

(ii) Adverse selection

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It is necessary to retain information for two significant reasons: legal obligation and business needs. Data that occupies the c
baherus [9]

Answer:

The correct answer is letter "B": business.

Explanation:

Business data represents the information of the transactions a company carries out as a result of its operations. Information about suppliers and customers is recorded for control purposes and, mainly, to cover the legal obligation to report the accounting analysis of the firm in the Financial Statements.

Besides, the accounting information of a firm allows managers to compare budget expectations with the current performance of the company to take decisions on what course the entity should follow to reach its objectives.

6 0
3 years ago
The condition of fully flexible wages and prices was assumed by
nignag [31]
The answer to this question is <span> B) the classical economists.
Classical economist based their assumptions on the view that market will always find a way to regulate itself without any external intervention.
In reality, many private establishments often exert their power to control a specific resource in the market in order to rake in more profit (such as what monopolist do)</span>
8 0
3 years ago
The $1,000 face value ABC bond has a coupon rate of 10%, with interest paid annually, and matures in 3 years. If the bond is pri
dybincka [34]

Answer:

Bond Price  = $951.9633746 rounded off to $951.96

Explanation:

To calculate the quote/price of the bond today, which is the present value of the bond, we will use the formula for the price of the bond. As the bond is an annual bond, we will use the annual coupon payment,  annual number of periods and annual YTM. The formula to calculate the price of the bonds today is attached.  

Coupon Payment (C) = 1000 * 10% = $100

Total periods remaining (n) = 3

r or YTM = 12%  

 Bond Price = 100 * [( 1 - (1+0.12)^-3) / 0.12]  + 1000 / (1+0.12)^3

Bond Price  = $951.9633746 rounded off to $951.96

7 0
3 years ago
Electrodo Co. purchased land for $55,000 with $20,000 paid in cash and $35,000 in notes payable. What effect does this transacti
Archy [21]

Answer:

(c). Net increase in assets of $35,000 and a net increase in liabilities of $35,000

Explanation:

Accrual basis of accounting attempts to record transactions as and when they arise and not on the basis of  when money is actually received or paid. Once a liability is certain, such a liability is provided for immediately.

The journal entry for purchase of Land partly by cash and partly for issuing a notes payable would be:

Land                                                  Dr. $55,000

     To Cash                                                          $20,000

     To Notes Payable                                           $35,000

(Being land purchased by payment of $20,000 in cash and a note being issued against the balance amount)

Land and cash are assets whereas Notes Payable is a liability.

So, the effect of the above transaction would be:

Net increase of $35,000 ( $ 55,000 - $ 20,000) as debit in fixed assets account increases their balance whereas cash being a real account, the rule being debit what comes in, credit what goes out. So credit in cash account would reduce the cash balance by $ 20,000.

Notes Payable account which is to be paid in future is a liability which shall increase the liabilities by $ 35,000.

So, the correct answer is (c), Net increase in assets of $35,000 and a net increase in liabilities of $35,000.  

5 0
3 years ago
A market might have an upward-sloping long-run supply curve if A. firms have different costs. B. consumers exercise market power
____ [38]

Answer:

Option A is correct

Firms have different costs.

Explanation:

Option A is correct

Long run supply curve is upward sloping or constant horizontal line depends on the industry whether it is variable cost industry (increasing production cost)  or a constant cost industry respectively. Option A is correct because if firms have different production cost and it is increasing as the output is increasing then it is upward Sloping long-run supply curve.

4 0
3 years ago
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