Answer True or False to the following.

33. In the united states , bonds are a more important source of external finance for business than are stock T F

34. Most American households own financial market securities True or False

35. Financial intermediaries benefit savers by reducing transaction costs True or False

36. Banks avoid the free-rider problem by primarily making private loans rather than purchasing securities that are traded in financial markets True or False

37. Collateral , which property promised to the lender if the borrower defaults, reduces the consequences of adverse selection because it reduces the lenders losses in the case of default True of False

38. Firms with higher net worth are the ones most likely to default True of False

39. Venture capitalists, unlike banks, are able to reduce moral hazard problems by placing individuals on the board of directors of the firm receiving the loan True or False

40. On the way of describing the solution that high net worth provides to the moral hazard problem is to say that it makes the debt contract incentive compatible True or False