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:

Supine Position

A body position where someone lies flat on their back facing upwards.

Paper Bag

A simple container made of paper, typically used for carrying items or packaging.

Reflex Hammer

A medical tool used by healthcare professionals to test deep tendon reflexes to check for abnormalities of the nervous system.

Neurological System

The part of an organism that coordinates its actions by transmitting signals to and from different parts of its body, encompassing the brain and spinal cord.