(Solved):Which of the following is an example of adverse selection? a. A homeowner with a large fire insurance policy allows the wiring in her house to deteriorate. b. A woman with a large life insurance po… View Answer…

 

Question

Which of the following is an example of adverse selection?

a. A homeowner with a large fire insurance policy allows the wiring in her house to deteriorate.

b. A woman with a large life insurance policy takes up sky diving.

c. Your brother-in-law borrows $20,000 from you to open a pizza parlor but spends it gambling at the racetrack instead.

d. A man with a bad heart condition buys a large life insurance policy.

 

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