Multiple Choice
Moral hazard problems arise when
A) lenders have difficulty in distinguishing between good and lemon firms.
B) a downturn in economic activity makes repaying loans difficult for borrowers.
C) borrowers default on loans.
D) borrowers have an incentive to conceal information.
Correct Answer:

Verified
Correct Answer:
Verified
Q1: Why do higher interest rates increase adverse
Q6: Individual investors can reduce transactions costs by<br>A)
Q7: It is generally agreed that<br>A) the financial
Q8: How does the principal-agent problem increase the
Q11: Since crowdfunding sites do not themselves invest
Q14: Small investors face<br>A) high transactions costs in
Q15: How does adverse selection affect the willingness
Q18: Which of the following is NOT an
Q70: To help offset the costs from loan
Q89: When interest rates in the bond market