Asymmetric Information

question 7

Multiple Choice

Asymmetric information:

• A) decreases the efficiency of financial markets.
• B) reduces the flow of funds to entrepreneurs.
• C) injures the real economy
• D) all of the above.

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Definitions:

Fraud in the Inducement

A deceptive practice intended to mislead someone into entering a contract or agreement by providing false statements or misleading information.

Warranty Liability

The legal obligation of a seller to provide compensation for faults in goods or property that were sold under warranty.

Primarily Liable

The direct obligation of an entity or individual to pay a debt or fulfill a contractual commitment without depending on another's performance of duty.

Secondarily Liable

A condition wherein an individual or entity is obligated to fulfill a duty or payment if the primarily liable party fails to do so.