Conflicts of Interest
1) The presence of economies of scope may benefit financial institutions but may create potential costs from ________.
A) conflicts of interest
B) multiple profitable enterprises
C) economies of scale
D) unsecured debt
2) Because conflicts of interest increase asymmetric information problems
A) the economy will not operate as efficiently.
B) loans will not be made.
C) banks will not be able to make a profit.
D) the financial markets will operate more smoothly.
3) Investment banks ________ companies issuing securities and ________ these securities by selling them to the public on behalf of the issuing companies.
A) research; underwrite
B) research; monitor
C) monitor; underwrite
D) monitor; manipulate