If financial markets were perfect, how might this factor have allowed Carson to avoid

financial institutions?
If financial markets were perfect it would definitely have a positive impact on companies
especially those entities like Carson Company because they wouldn’t have to worry about
borrowing money from financial institutions plus they could avoid high interest rates that
they have to pay. Lastly, they won’t have to deal with the different types of condition
before the financial institution lends them the money.

The loans that Carson has obtained from commercial banks stipulate that Carson must
receive the banks’ approval before pursuing any large projects. What is the purpose of
this condition? Does this condition benefit the owners of the company?
The purpose of the condition from the banks is because they should have an assurance if
the company can pay the agreed upon rate that the bank is giving them. It is significant
that the bank should do a background check of the creditworthiness of its borrowers.
Some banks have tight conditions because the borrowed amount of entities such as
Carson Company is not just a small amount as stated it is for a large projects that a bank
could not easily disburse as long as they like hence the conditions. These conditions may
or may not benefit the owners of the company mainly because there are lots of
possibilities that could happen. If the agreed upon rates are small and affordable then it is
a benefit for the owners but if the rates are too high it could gravely cause a loss for the
owners. Lastly, if banks are loose to the borrowers, debtors would take advantage of it
and the tendency would definitely result to huge uncollectible amounts.