Ball has a nice numerical example in the chapter that he uses three times: it is the safe/risky bond example that he uses to discuss adverse selection, then moral hazard and the effect of collateral requirements. Make sure you understand the analysis and logic of the example

Be thoroughly familiar with Tiroles generic moral hazard model and how it explains credit rationing. What determines the minimum level of equity the entrepreneur must put into a project if they are to get financing Moral hazard and equity finance. Be familiar with the so-called principal-agent problem and ways that it can be/has been addressed. Understand the free-rider problem associated with monitoring .Be able to explain how compensating top management with put options on the companys stock can create distorted incentives.