Because of the Adverse Selection Problem

question 19

Multiple Choice

Because of the adverse selection problem

• A)good credit risks are more likely to seek loans causing lenders to make a disproportionate amount of loans to good credit risks.
• B)lenders may refuse loans to individuals with high net worth,because of their greater proclivity to "skip town."
• C)lenders are reluctant to make loans that are not secured by collateral.
• D)lenders will write debt contracts that restrict certain activities of borrowers.

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Definitions:

Nucleus

A membrane-bound organelle found in eukaryotic cells that contains most of the cell's genetic material.

Neutrons

Neutral, subatomic particles found in the nucleus of an atom, contributing to the atom's mass but not its charge.

Protons

Protons are positively charged subatomic particles found within the nucleus of an atom and contribute to the atom's overall charge and mass.

Orbiting

The act of one object moving around another in a path called an orbit, due to gravitational forces.