l T-Mobile 4:36 PM * 78% bbhosted.cuny.edu higher wage elsewhere QUESTION 10 poi

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l T-Mobile 4:36 PM * 78% bbhosted.cuny.edu higher wage elsewhere QUESTION 10 points / Saved Which of the following creates Ex Ante Moral Hazard as it relates to microloans? a None of the above Ob. Profits are higher tharn principle and interest payment to lender OC. Borrower can take the profits and leave town instead of repay bank Od. Borrower can earn a higher wage elsewhere Click Save and Submit to save and submit Click Save All Answers to save all answers Save All Answers Close Window Save and Submit

Explanation / Answer

## Ex ante moral hazard occurs when one party doesnt perform optimally before occurance of event. So (d). Borrower could earn more elsewhere to repay the loan

## interest on 300 loan = (12 + 5 + 25/300) = 25.33% ~ 25%

Interest on 100 loan is Higher than 300 loan due to fixed transaction cost

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