One Consequence of Asymmetric Information in the Market for Bank

question 94

Multiple Choice

One consequence of asymmetric information in the market for bank loans is that _____

• A)few privileged customers are offered loans.
• B)few bad loans are made and the default rate is low.
• C)more bad loans than good loans may be made.
• D)lenders benefit at the expense of borrowers.
• E)the interest charged on good loans is higher than that charged on bad loans.

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Definitions:

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