Time left 0:07:03 Which of the following covenants is affirmative (positive)? a. A company must keep a minimum liquidity ratio of 1.5 b. All of the answers are examples of negative covenants. . C. A company is required by its bank to pay no dividend over one JOD per share d. A company is required to notify the bank before taking new debt. Clear my choice At first Hundal produced low quality cars then decided to improve the quality for their cars. In order to communicate the new improved quality of their cars, Hundal issued a warranty that protects consumers for 10 years. This example shows a case of: a. Information asymmetry situation solved by a credible signal. b. Agency situation solved by monitoring. C. Information asymmetry situation solved by monitoring through issuing the warranty. d. Agency situation solved by a credible signal. The bank knows little information relative to the firms with regard to how they will use the funds after they secure the loan. The difference in information is called and it creates the problem. a. adverse selection; risk sharing b. adverse selection; moral hazard c. Information asymmetry; moral hazard . d. Information asymmetry; adverse selection Clear my choice In the securitization process, the reference portfolio is: a. originated by the special purpose vehicle (SPV) b. the collection of mortgages in the MBS c. the tranches of the ABS d. the senior tranche of the ABS Clear my choice O E Assume you want to purchase a used car and you know that the car dealer knows the quality of the car and you don't. However, you know the distribution of car quality which is as follows: Very good cars 10% of used cars and valued at 40000; good cars 25% of used cars and valued at 20000; acceptable cars 50% of used cars and valued at 18000; bad cars the rest of used cars and valued at 9000. How much you are willing to offer? [ DO NOT use, For example if your final answer is 25000 DO NOT write it as 25,000). Answer: Your parents purchased a new laptop for your birthday. You didn't use the laptop for one month because you didn't like the brand. Finally, you decide to sell it on Open Souq at a 5% discount off the original price. Is it likely that you will sell the laptop at this price? a. Yes, the laptop is still new and worth close to the original price. b. No, nobody uses online websites for trades. c. Yes, shoppers at Open Souq will think that a new laptop at 5% discount is a good bargain d. No because shoppers at Open Souq do not know the exact quality of the laptop and they will assume the worse
