The Use of Collateral

question 42

Multiple Choice

The use of collateral

• A)allows banks to charge higher interest rates on loans.
• B)makes it more costly for borrowers to take advantage of their asymmetric information.
• C)makes it more costly for lenders to take advantage of their asymmetric information.
• D)has important tax implications for both borrowers and lenders.

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Definitions:

Chanel #5

A classic and highly influential fragrance created by the French fashion house Chanel in 1921.

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any need for prior learning.

Reflexive Stimulus

A stimulus that automatically elicits a reflex action, such as pulling your hand away from a hot surface without thinking.

Conditioned Stimulus

An initially neutral cue that becomes capable of provoking a conditioned response after being linked with an unconditioned stimulus.