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FOIL Assignment 4 (1)-1.docx (Protected View) - Word References Mailings Review View Help Tell me what you want to do contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing subulu oc lou ( dovie spaceu pages, fefe wowie Formal requCHICIts page 101 specInIC format requirements. Respond to each of the following questions. 1. Explain the principal-agent problem as it pertains to equity contracts. 2. Why does the free-rider problem occur in the debt market? Provide one (1) supporting fact. 3. Your bank has the following balance sheet. Assets Reserves $50 million Securities $50 million Loans $150 million Liabilities Checkable deposits $200 million Bank capital $50 million If the required reserve ratio is 10%o, describe two (2) actions that the bank manager should take if there is an unexpected deposit outflow of $50 million? 4. How can specializing in lending help to reduce the adverse selection problem in lending? Provide two (2) examples to support your response. & 15 8 O