Multiple Choice
Moral hazard arises from
A) the difficulty of distinguishing good-risk borrowers from bad-risk borrowers.
B) the likelihood that bad-risk borrowers are more likely to accept a loan than are good-risk borrowers.
C) savers' difficulties in monitoring borrowers.
D) borrowers' difficulties in locating savers.
Correct Answer:
Verified
Correct Answer:
Verified
Q83: When managers do not own very much
Q84: Banks overcome the free-rider problem faced by
Q85: Generally, when there is asymmetric information<br>A)a lender
Q86: Information costs<br>A)are the costs of buying and
Q87: Which of the following does NOT represent
Q89: When interest rates in the bond market
Q90: The free-rider problem faced by private information-collection
Q91: Individual investors can reduce transactions costs by<br>A)buying
Q92: One method that lenders use to mitigate
Q93: Why did one prominent economist state that