If 2 percent growth is your break-even point for an investment project, under which outlook for the economy would you be more inclined to go ahead with the investment: (1) A forecast for economic growth that ranges from 0 to 4 percent, or (2) a forecast of 2 percent growth for sure, assuming the forecasts are equally reliable? What core principle does this illustrate?

18.* Why are large, publicly listed companies much more likely than small businesses to sell fi nancial instruments such as bonds directly to the market, while small businesses get their fi nancing from fi nancial institutions such as banks?

19.* During the fi nancial crisis of 2007–2009, some fi nancial instruments that received high ratings in terms of their safety turned out to be much riskier than those ratings indicated. Explain why markets for other fi nancial instruments might have been adversely affected by that development.