EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9781305465626
Author: Blinder
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 31, Problem 2DQ
To determine
Explain the subprime borrowers and prime borrowers.
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Why do the creditors generally charge higher interest rates on new borrowing?
Which of the following is NOT typically a role for a financial intermediary...?
make public financial statements of borrowers
evaluate the riskiness of lending to borrowers
pool funds from lenders
monitor the financial conditions of borrowers
Please try to be as brief as possible
Chapter 31 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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Similar questions
- what are the economic goals of high-interest rate?arrow_forwardWhat type of bond is issued by state and local governments? Is there any risk that state and local governments might default on these bonds? What special feature do these bonds have that make them particularly attractive to certain taxpayers?arrow_forwardWhy are bonds somewhat risky to buy, even though they make predetermined payments based on a fixed rate of interest?arrow_forward
- Explain the difference of the demand of financial services of the rich and middle income people and poor people. *arrow_forwardFrom a firm’s point of view, how is a bond similar to a bank loan? How are they different?arrow_forwardWhat is an interest “reference rate,” and how is it used to set rates for individual borrowers? From the point of view of a borrowing corporation, what are credit and repricing risks? Explain the steps a company might take to minimize both.arrow_forward
- Exercise #1: Write two paragraphs on the impact of borrower liquidity (think, cash like assets and income) vs. equity (think, property value). These issues can be measured at loan origination, and also can and do change over the life of the loan. They are effected by macro-economic factors, like the local or general health of the economy and by personal factors like death, divorce, lost of employment, and over spending/poor financial management.arrow_forwardCompare credit, savings, and investment services available to the consumer from financial institutions.arrow_forwardPlease answer fastarrow_forward
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