Question
Assuming we are under monopoly and asymmetric information, what is the highest interest for which both types (safe and risky) stay in the market? If
If this market is composed of 50% safe borrowers and 50% risky borrowers. What is the expected profit (per loan) for the lender when the interest rate is 1.5?
400.00 300.00 200.00 100.00 0.00 -100.00 -200.00 -300.00 0.5 1 Objective functions -E(YS) 1:5 -E(YR) 2 E(NS) 2,5 -E(NR) 3.5
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Microeconomics An Intuitive Approach with Calculus
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