Adverse Selection

question 136

Multiple Choice

Adverse selection:

• A)results from unobserved characteristics of people or commodities.
• B)relates to the actions of people.
• C)occurs after parties have entered into an agreement.
• D)All of these statements are true.

---

Definitions:

Bearer Instrument

Any instrument that is not payable to a specific person, including instruments payable to the bearer or to “cash.”

Authorized Representative

An individual or entity legally empowered to act on behalf of another person or group in business dealings.

Negotiate

The process of discussing something with one or more people in order to reach an agreement or compromise.

Assignment

The act of transferring rights or duties under a contract to another party.