An Automobile Finance Company Faces an Adverse Selection Problem If

question 112

Multiple Choice

An automobile finance company faces an adverse selection problem if borrowers

• A) with a greater chance of defaulting on their car loans get loans from the lender.
• B) with no chance of defaulting on their car loans get loans from the lender.
• C) choose to get their car loans from a source other than the finance company.
• D) choose a 5-year loan as opposed to a 2-year loan.

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Definitions:

Affective Learning Domain

An area of learning that involves the education of emotions, attitudes, and values.

Attitudes

Attitudes are the psychological tendencies expressed by evaluating a particular entity with some degree of favor or disfavor.

Values

Principles or standards of behavior that are considered important or beneficial in life, guiding the way individuals act and make decisions.

Learner Assessment

The process of evaluating the knowledge, skills, attitudes, and educational progress of students or trainees.