The Problem of Adverse Selection Helps to Explain

Multiple Choice

The problem of adverse selection helps to explain

A) why firms are more likely to obtain funds from banks and other financial intermediaries,rather than from securities markets.
B) why collateral is an important feature of consumer,but not business,debt contracts.
C) why direct finance is more important than indirect finance as a source of business finance.
D) why lenders refuse loans to individuals with high net worth.