The Term "Economics of Information" Refers to a Theory That

question 5

Multiple Choice

The term "economics of information" refers to a theory that proposes that:

• A) minority group members are usually not informed of all of their fights as a borrower,and are therefore not allowed to take advantage of economic opportunities available to others
• B) often the expense of acquiring information is greater than the benefits. In such a case,discrimination may occur
• C) firms with the best information about their borrowers are almost always more successful. But,it may be illegal to ask borrowers to supply that information or to base the loan decision upon that information
• D) discriminatory firms generally have to spend more to ensure that their records comply with the strict letter of the regulations

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Definitions:

Participating

In finance, it often refers to securities or investments that have the potential to share in additional earnings or payouts beyond a predetermined amount.

Non-cumulative

Referring to preferred stocks or dividends that do not accumulate or carry forward unpaid dividend amounts if they are not declared in a given period.

Preferred Stock

A category of corporate equity that takes precedence over common stock in terms of asset claims and earnings, typically offering stable dividend payments.

Par-value

The face value of a bond or stock as stated by the issuing company, which may differ from the market value.