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C Secure https://bbhosted.cuny.edu/webapps/assessment/take/launch.jsp?course_assessment id1io3958, D. 4396, lower, fixed cost of funds c. 25%, higher, variable cost of funds O d, 25%, higher, fixed transaction cost QUESTION 2 Microfinance clients cannot repay loans with more than their current (unpredictable) income. This is an example of 0 a. Limited Liability O b. Sixteen Decisions OC. Agency Problems o d. Production function QUESTION 3 Which of the following creates Ex Post Moral Hazard as it relates to microloans? O a. None of the above Ob. Borrower can earn a higher wage elsewhere c.Borrower can claim lower profits than were actually earned on product sales Od. Profits are lower than principle and interest payment to lender

Explanation / Answer

This is an example of Limited Liability.
Limited liability in case of shareholders states that the shareholders are responsible(in a legal way) for the debts of a company only to the maximum extent of the nominal value of their shares,
Similarly, Limited liability in case of Microfinance clients states that the client cannot repay loans with more than their current income.

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