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Author Question: Moral HazardSuppose a bank has an opportunity to invest in a risky project. If the project is ... (Read 474 times)

unreallynx

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on: Nov 23, 2022
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
Macroeconomics ¦ Acemoglu, Laibson, List ¦ 3rd Edition
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Marked as best answer by unreallynx on Nov 23, 2022

marufp

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Reply #1 on: Nov 23, 2022
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.
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unreallynx

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

jamesnevil303

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Reply 3 on: Yesterday
:D TYSM

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