Which of the Following Is Not True of Adverse Selection

question 91

Multiple Choice

Which of the following is not true of adverse selection?

• A) It exists because information is perfect.
• B) It describes the problem a lender faces in identifying loan applicants as good or bad risk borrowers.
• C) It arises because borrowers have more information than lenders regarding their creditworthiness.
• D) It arises if lenders try to charge an average price to all applicants.

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Definitions:

Proctoscopy

A medical procedure where a special instrument, called a proctoscope, is used to examine the anal cavity, rectum, or sigmoid colon.

Uterus

A major female hormone-responsive reproductive sex organ of most mammals, including humans, responsible for housing and nurturing the fetus.

Myosarcoma

A malignant tumor derived from muscle tissue, often aggressive and requiring early treatment.

Choriocarcinoma

A fast-growing cancer that occurs in a woman's uterus (the womb), typically following a pregnancy or abortion and originates from cells that would have become the placenta.