Multiple Choice
Which of the following actions best illustrates adverse selection?
A) A person purposely chooses bonds of corporations with high default risk because of the high returns.
B) A person dislikes losing $400 more than he likes winning $400.
C) After obtaining automobile insurance a person drives less carefully than before.
D) A person intending to take up dangerous hobbies applies for life insurance.
Correct Answer:
Verified
Correct Answer:
Verified
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