Suppose there is no inflation, and the current interest rate is 4% per year. Erin plans to open a savings account and deposit $100 annually for the next 5 years. She plans to leave this money untouched for 10 more years. At the end of the period, the balance of her savings account will be
A) 2500(1.045 - 1).
B) 2000(1.0415-1).
C) 2000(1.045 - 1)(1.04)10.
D) 2500(1.045 - 1)(1.04)10.
D
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The ________ problem helps to explain why the private production and sale of information cannot eliminate ________
A) free-rider; adverse selection B) free-rider; moral hazard C) principal-agent; adverse selection D) principal-agent; moral hazard
If lenders anticipate no changes in liquidity, information costs, and tax differences, the yield on a risky security should be
A) greater than that on a safe security and the price of a risky security should also be greater than that of a safe security. B) less than that on a safe security and the price of a risky security should also be less than that of a safe security. C) greater than that on a safe security and the price of a risky security should be lower than that of a safe security. D) less than that on a safe security and the price of a risky security should be greater than that on a safe security.