The total cost of carrying out a transaction in financial markets increases proportionally with the size of the transaction. (II) In North America, issuing stocks and bonds is the most important source of external for nonfinancial businesses Select one: a. (1) is true; (II) false. b. (l) is false; (II) true. c. Both (1) and (II) are true. d. Both (1) and (II) are false. Which of the following are accurate statements concerning the role that covenants play in reducing moral hazard in financial markets? Select one: a. Covenants reduce moral hazard by restricting borrowers' undesirable behavior. b. Covenants require that borrowers keep collateral in good condition. c. Covenants require that the borrowers reports periodically their operating performances. d. All of the above. e. Only A and B of the above