1)Suppose that horses are an inferior good

1.A decrease in the price of horses and an uncertain change in the quantity of horses maybe because, there are no close substitutes to horses, the cost of feeding horses reduced over a period of time hence the quantity has increased.

2.For the banks leverage is nothing but an investment strategy for using specifically borrowed money also for the various financial instruments are used and the borrowed capital used for increasing the potential return from the investment.the total amount of death which a farm uses as a financial asset is also referred as leverage. One of the most leveraged institutions are the banks. Fractional reserve banking and the federal deposit insurance corporation combinedly has provided a banking environment which has very limited lending risk. Banks can be highly leveraged.the regulator has a solution to this problem with the use of ratio of the assets to capital upon the balance sheet of the bank or the banks leverage ratio. The higher leverage ratio indicates that the bank had to use comparatively more capital in order to finance its assets and used least amount of total amount of borrowed funds.when a bank can cause loss then its leverage is pushed towards the required ratio then the bank will required to raise more capital by the way of retained earnings or also issue of new equity. Alternatively the bank can reduce its assets as well as liabilities by the way of of selling loans and repaying the debts.
CDOs that is collateralized debt obligations is a financial instrument which acts as a payment to the investors from a entire gamut of revenue development sources. If the value of CDOs decline mainly mortgages then a financial devastation is caused at the financial crisis. In other words CDOs is a finance product which has a complex structure which is valid by huge amount of loans and different assets which are sold to institutional investors. Profits of banks are enhanced by CDOslike securities which are backed by mortgages and are financed by the debt but can take reverse ways if the market it turns opposite. Profit is a very important indicator of the financial health.

3.A free market is where there are little or no regulations made by the government on an economy dependent on supply and demand.
The invisible hand is a word used for the unseen forces which move such a free market as above. It is driven by the freedom by the freedom of production and supply as well as individual self-interests. As a whole, this works on society's best interests. This concept was introduced by Adam Smith and mostly used in the 1990s.

Each free exchange in the market creates signals about the value of that good or service and how tough it is to obtain them. Such signals are captured in the price system, which drive the competing producers, distributors, retailers and consumers. Each one of them pursues their individual plans to satisfy the needs and desires of others.