This topic contains a solution. Click here to go to the answer

Author Question: Moral HazardSuppose a bank has an opportunity to invest in a risky project. If the project is ... (Read 475 times)

unreallynx

  • Full Member
  • ***
  • Posts: 152
Moral Hazard

Suppose a bank has an opportunity to invest in a risky project. If the project is successful, the bank will earn $7,000; if it is unsuccessful, the bank will lose $14,000. If the project has a 95 percent chance of being successful and the bank is risk-neutral, will the bank make the investment?

Now suppose the government establishes a policy that helps banks that are suffering losses. Under this policy the government will give the bank 50 percent of its losses if the project is unsuccessful. If the bank is risk-neutral, will the bank make the investment?
◦ yes, yes
◦ no, no
◦ no, yes
◦ yes, no


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by unreallynx on Nov 23, 2022

marufp

  • Full Member
  • ***
  • Posts: 169
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 64% of students answer this correctly




unreallynx

  • Member
  • Posts: 152
Reply 2 on: Nov 23, 2022
YES! Correct, THANKS for helping me on my review


sarah_brady415

  • Member
  • Posts: 328
Reply 3 on: Yesterday
Gracias!

 

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

Medication errors are three times higher among children and infants than with adults.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

When blood is exposed to air, it clots. Heparin allows the blood to come in direct contact with air without clotting.

Did you know?

The liver is the only organ that has the ability to regenerate itself after certain types of damage. As much as 25% of the liver can be removed, and it will still regenerate back to its original shape and size. However, the liver cannot regenerate after severe damage caused by alcohol.

For a complete list of videos, visit our video library