If Knowledge Possessed by One Party in a Financial Transaction

question 44

Multiple Choice

If knowledge possessed by one party in a financial transaction is not known to the other party, ________ exists.

• A)disintermediation
• B)asymmetric information
• C)fraud
• D)no financial intermediation

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Definitions:

Paralysis of Credit Markets

Paralysis of credit markets refers to a situation where lending comes to a near halt due to extreme uncertainty or financial crisis, leading to economic slowdown.

Economic Crisis

A situation characterized by a sharp decline in economic activity, often accompanied by a drop in GDP, high unemployment, and financial instability.

Abu Ghraib Prison

A detention facility near Baghdad, Iraq, that became notorious for the abuse and torture of prisoners by American military personnel in 2004.

Abuse and Torture

Unjust practices involving the infliction of severe pain or suffering, physical or psychological, often by those in positions of power, against individuals.