A Company Wishes to Borrow $10,000 but to Efficiently Monitor

question 3

Multiple Choice

A company wishes to borrow $10,000 but to efficiently monitor that loan each lender will incur costs of $100.What is the difference in monitoring costs per lender (as a percentage of loan value) between the firm borrowing all the money from one lender and splitting the loan between ten lenders

• A) 0%
• B) 1%
• C) 5%
• D) 9%
• E) 10%

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Definitions:

Melatonin

Hormone, secreted by the pineal gland, that is involved in biorhythms.

Day-Night Schedule

The daily cycle of light and darkness, influencing the behavior and physiological processes of living organisms.

Satiety

The feeling of fullness or satisfaction that signifies the end of eating, regulated by hormonal signals in response to food intake.

Hypothalamus

A region of the brain responsible for producing hormones that regulate fundamental bodily functions, including temperature, hunger, and thirst.