The 'Equity' Problem Is

question 20

Multiple Choice

The 'equity' problem is

• A)fundamentally about the distribution of income in the capitalist system, and what seems fair given different people's inputs, job security, advancement, recognition, diversity, and flexible work schedules.
• B)about banks' inadequate reserves of equity compared to their debt funding from savers.
• C)about excessive gearing generally in the financial system, and the failure of global regulators to ensure adequate reserve ratios.
• D)the old agency problem: shareholders being ripped off by managers giving themselves bonuses that are far too generous.

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Definitions:

Interest Earned

The amount of money gained on an investment or savings account over time due to applied interest rates.

Interest Rate

The percentage at which interest is paid by borrowers for the use of money that they borrow from a lender.

Maturity Value

The amount that will be received at the end of a fixed income investment period, such as bonds or certificates of deposit.

Invested

The process of investing funds or capital into a project anticipating the generation of extra income or gains.