The Concept of Adverse Selection Helps to Explain All of the Following

question 42

Multiple Choice

The concept of adverse selection helps to explain all of the following EXCEPT

• A)why firms are more likely to obtain funds from banks and other financial intermediaries,rather than from the securities markets.
• B)why indirect finance is more important than direct finance as a source of business finance.
• C)why direct finance is more important than indirect finance as a source of business finance.
• D)why the financial system is so heavily regulated.