When the Least Desirable Credit Risks Are the Ones Most

question 22

Multiple Choice

When the least desirable credit risks are the ones most likely to seek loans,lenders are subject to the

• A) moral hazard problem.
• B) adverse selection problem.
• C) shirking problem.
• D) free-rider problem.
• E) principal-agent problem.

---

Definitions:

Identify And Weigh

The process of recognizing various factors or options in a decision-making scenario and assessing their importance or impact to inform a choice.

Decision Criteria

The standards or benchmarks that guide the selection of alternatives in the process of making a decision.

Programmed Decisions

Decisions that are made in routine, structured situations by following established policies or rules.

Nonprogrammed Decisions

Decisions that are unique and require custom solutions, typically made in complex and unpredictable situations.