Which of the following is correct regarding why interest rates differ for different people or businesses, or for things like business loans, mortgage loans, student loans, and car loans?
a. Interest rates tend to be lower for those borrowers judged to be less likely to repay their loan.
b. Interest rates tend to be higher for loans extended for shorter periods of time.
c. The cost of administering one large loan will tend to be higher than the cost of administering the same amount of money extended to borrowers through many small loans.
d. Interest rates tend to be lower for those borrowers judged to be more likely to repay their loan.
d
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Refer to Figure 14.3. Suppose the economy is initially at long-run equilibrium and the economy experiences a demand shock such as a stock market crash. This is best represented by an initial movement from
A) point C to point A. B) point C to point B. C) point C to point D. D) point D to point A.
Financial disintermediation occurs when:
a. Businesses no longer borrow directly in the bond market. b. Businesses no longer issue stock. c. Individuals no longer trade securities in the secondary market. d. Individuals withdraw funds from financial intermediaries and invest them elsewhere. e. All of the above.