A Borrower Who Takes Out a Loan Usually Has Better

question 7

Multiple Choice

A borrower who takes out a loan usually has better information about the potential returns and risk of the investment projects he plans to undertake than does the lender. This inequality of information is called

• A)moral hazard.
• B)asymmetric information.
• C)noncollateralized risk.
• D)adverse selection.

---

Definitions:

Retail Chain

A network of stores owned by the same company, offering a variety of products or services across multiple locations.

Systematic

An approach characterized by a methodical and organized procedure or process.

Step-By-Step Fashion

A methodology or process that proceeds sequentially, one step at a time.

Problem Solving

The process of identifying a trouble or challenge and finding the best way to resolve it effectively.