Steve Borrowed Some Money from Summit Bank, Telling the Loan

Multiple Choice

Steve borrowed some money from Summit Bank, telling the loan officer that he intended to use the money to remodel his restaurant. After getting the loan, Steve and his girlfriend immediately took the money and went gambling in Vegas.

A) This is an example of adverse selection since banks have difficulty selecting their customers.
B) This example does not involve asymmetric information.
C) From the given information, Steve is the principal and Summit Bank is the agent.
D) None of the above are correct.