Question: Question 4 (a)Explain any THREE (3) basic facts about a financial structure.(8 marks) (b)(i)Explain how 'moral hazard' arises in the securities market with example.(5 marks)

Question 4

(a)Explain any THREE (3) basic facts about a financial structure.(8 marks)

(b)(i)Explain how 'moral hazard' arises in the securities market with example.(5 marks)

(ii)Describe how debt contracts are used as tools to solve the principal-agent problem with example. (6 marks)

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