Adverse Selection Refers to the

question 60

Multiple Choice

Adverse selection refers to the

• A) possibility that the borrower may engage in riskier behavior after the loan is obtained.
• B) likelihood that a potential borrower may use the funds that he receives for unworthy, high risk projects.
• C) possession of information by one party in a financial transaction not known by the other party.
• D) use of statistical discrimination in making loans.

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Definitions:

Established Customer Base

A group of loyal customers a business has successfully developed over time, which forms the core of its regular buyers or clients.

Previous Management

Refers to the former team or individual(s) responsible for overseeing and directing the operations and strategic decisions of an organization.

Image

The general perception that the public or target audience has of a brand, company, or individual.

Business Location

The physical or virtual place where a company is situated or conducts its operations, which can significantly impact its success.