Which of These Is an Example of Asymmetric Information in Banking

question 25

Multiple Choice

Which of these is an example of asymmetric information in banking?

• A)Borrowers and lenders have different expectations about financial markets.
• B)Lenders know more about the capacity of borrowers to repay loans than borrowers.
• C)Borrowers' goals are short-term while lenders' goals are long-term.
• D)Borrowers know more about their capacity to repay loans than lenders.

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Definitions:

Canadian Dollar

The currency of Canada, represented by the ISO code "CAD" and symbolized by "$".

U.S. Dollar

The official currency of the United States and a standard unit of measurement for global financial transactions.

Triangle Arbitrage

A riskless profit strategy that takes advantage of discrepancies in exchange rates in different markets by conducting a series of conversions among three currencies.

Currency Market

Also known as the foreign exchange market (Forex), it's a decentralized global market where currencies are traded, determining the foreign exchange rates for every currency.