the economics of money, banking, and financial markets

217 #

© 2014 Pearson Canada Inc.#

19. 
    

    The predominant form of household debt is ____.
    A) consumer installment debt
    B) collateralized debt
    C) unsecured debt
    D) unrestricted debt
    Answer: B
    Diff: 1 Type: MC Page Ref: 163
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


20. 
    

    If you default on your auto loan, your car will be repossessed because it has been pledged as
    ____ for the loan.
    A) interest
    B) collateral
    C) dividend
    D) commodity
    Answer: B
    Diff: 1 Type: MC Page Ref: 163
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


21. 
    

    Commercial and farm mortgages, in which property is pledged as collateral, account for
    ____.
    A) one-quarter of borrowing by nonfinancial businesses
    B) one-half of borrowing by nonfinancial businesses
    C) one-twentieth of borrowing by nonfinancial businesses
    D) two-thirds of borrowing by nonfinancial businesses
    Answer: A
    Diff: 2 Type: MC Page Ref: 163
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard

    
    


22. 
    

    A ____ is a provision that restricts or specifies certain activities that a borrower can
    engage in.
    A) residual claimant
    B) risk hedge
    C) restrictive barrier
    D) restrictive covenant
    Answer: D
    Diff: 1 Type: MC Page Ref: 163
    Skill: Recall
    Objective List: 8.1 Depict how asymmetric information results in adverse selection and moral
    hazard