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(60 Marks) A risk-neutral bank has cash A and access to investment op- portunities that yield RI in the case of success and 0 in
(60 Marks) A risk-neutral bank has cash A and access to investment op- portunities that yield RI in the case of success and 0 in the case of failure where I is the amount of investment undertaken. The bank can behave and receive no private benefit or misbehave and get a private benefit pro- portional to the size of investment, BI. If the bank behaves the probability of success is p while if the bank misbehaves it is only PL
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