Term
| A financial intermediary that sells shares to individuals and the invests the proceeds in bonds or stocks |
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Definition
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Term
| This reduces the consequences of adverse selection because it reduces the lender's losses in the even of a default |
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Definition
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Term
| The difference between a firms assets and its liabilities |
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Definition
| Net worth aka equity capital |
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Term
| Two important tools are used to help solve adverse selection and moral hazard problems in credit markets |
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Definition
| Collateral and restrictive covenants |
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