In Order to Reduce the ________ Problem in Loan Markets,bankers

question 114

Multiple Choice

In order to reduce the ________ problem in loan markets,bankers collect information from prospective borrowers to screen out the bad credit risks from the good ones.

• A)moral hazard
• B)adverse selection
• C)moral suasion
• D)adverse lending

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Definitions:

Consolidated Retained Earnings

The collective earnings retained by a group of companies after dividends are paid, reported on a consolidated financial statement.

Acquisition Transaction

A business deal where one entity purchases most or all of another entity's shares or assets to take control of that entity.

Fair Value

Fair value is a financial concept that estimates the price at which an asset or liability could be traded in an arm's length transaction between willing parties, in an open and unrestricted market.

Credit Balance

The amount of money in a financial account that represents a creditor's claim against a debtor; often seen in accounts payable or loan amounts.