Acme Widget tells investors it wants to build a new widget factory and sell investors $10,000,000 in bonds to finance it. Once they have raised the $10,000,000 the owners of Acme Widget use the funds to finance a trip to Atlantic City to try out a new scheme they have devised to win at blackjack. T...
Fintech Final Study Guide || All Correct.
Acme Widget tells investors it wants to build a new widget factory and sell investors $10,000,000 in bonds to finance it. Once they have raised the $10,000,000 the owners of Acme Widget use the funds to finance a trip to Atlantic City to try out a new scheme they have devised to win at blackjack. This is an example of correct answers the moral hazard problem in financial markets.
The existence of adverse selection results in correct answers reduced market efficiency.
Which of the following agencies has established standardized accounting principles for reporting
corporate earnings? correct answers The Securities and Exchange Commission
In regard to crowdfunding, investors with incomes or net worth of greater than $100,000 can invest up to ________ per year in equity in startups through online crowdfunding sites. correct answers 10% of their income or net worth
Since crowdfunding sites do not themselves invest in business start ups that raise funds on their sites, they don't reduce correct answers the principal-agent problem.
Which of the following is the most likely result of financial intermediaries? correct answers increased funds available to borrowers
Which of the following is a correct concerning the two sides of a balance sheet? correct answers Assets on the left, liabilities and shareholder's equity on the right.
What form of energy is China and India racing forward to implement in their countries? correct answers Solar
Which of the following is considered one of the five categories of real-time payments? correct answers All of the above are considered to be categories of real-time payments.
Why is adverse selection more likely in financial markets when interest rates rise? correct answers The remaining borrowers are more likely to be risky.
All of the following are benefits of securitization EXCEPT correct answers risk sharing.
The reduction in transactions costs brought about by financial intermediaries benefits correct answers both small savers and small borrowers.
The reduction in average cost resulting from an increase in the volume of a good or service produced is called correct answers economies of scale.
The connection between a developed country's financial system and the performance of the country's economy correct answers was recognized in the early days of the country and remains strong today.
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