(Solved):Which of the following is not true of adverse selection? a. It would not exist in a world with perfect information b. It arises because borrowers typically know more about themselves than lenders c… View Answer…

 

Question

Which of the following is not true of adverse selection?

a. It would not exist in a world with perfect information.

b. It arises because borrowers typically know more about themselves than lenders.

c. It describes a lenders problem of distinguishing the good-risk applicants from the bad-risk applicants.

d. It takes a lender’s problem in monitoring borrowers’ use of funds.

 

EXPERT ANSWER

The correct answer is d. It takes a lender’s problem in monitoring borrowers’ use

Scroll to top