Multiple Choice
Which of the following is NOT true of moral hazard?
A) It would not exist in a world of perfect information.
B) It arises because borrowers typically know more than lenders.
C) It describes a lender's problem of distinguishing the good-risk applicants from the bad-risk applicants.
D) It describes a lender's problem in verifying borrowers are using their funds as intended.
Correct Answer:
Verified
Correct Answer:
Verified
Q1: Why do higher interest rates increase adverse
Q2: The assumption of asymmetric information means that<br>A)borrowers
Q3: Financial intermediaries reduce transactions costs by<br>A)charging fees
Q4: Venture capital firms attempt to overcome the
Q6: Recent research has shown that<br>A)countries with investor
Q7: Use the analysis presented in this chapter
Q8: Small savers face<br>A)high transactions costs in financial
Q9: Credit rationing refers to<br>A)the increase in the
Q10: The "lemons problem" exists in the market
Q11: Which of the following is an example