The Concept That the Borrowers Who Are Most Willing to Accept

question 16

Multiple Choice

The concept that the borrowers who are most willing to accept a high interest rate are the same borrowers who are most likely to default on their loans is called

• A)moral hazard.
• B)captive borrowers.
• C) adverse selection.
• D) asset transformation.

---

Definitions:

Potassium Chloride

A metal halide salt composed of potassium and chlorine, used in various applications including as a fertilizer, in medicine, and in food processing.

Lithium Bromide

A chemical compound used mainly in air conditioning systems as a desiccant due to its hygroscopic nature and in some pharmaceuticals; its formula is LiBr.

Electrolytes

Minerals in your body that have an electric charge, crucial for various bodily functions including nerve signaling and fluid balance.

Inorganic Compound

A chemical compound that lacks carbon-hydrogen bonds, typical of non-living chemical systems.