To reduce moral hazard problems, banks include restrictive covenants in loan contracts. In order for these restrictive covenants to be effective, banks must also
A) monitor and enforce them.
B) be willing to rewrite the contract if the borrower cannot comply with the restrictions.
C) trust the borrower to do the right thing.
D) be prepared to extend the deadline when the borrower needs more time to comply.
A
Economics
You might also like to view...
Figure 18.3Refer to Figure 18.3. In autarky, the maximum amount of pogo sticks that Livonia can produce is:
A. 120. B. 100. C. 80. D. 40.
Economics
Technical change that results in a change in the production process is known as disembodied technical change.
Answer the following statement true (T) or false (F)
Economics