Individuals Who Have a Tendency to Default Are Usually More

question 109

Multiple Choice

Individuals who have a tendency to default are usually more willing to pay high interest rates and thus get loans.This describes an example of _____

• A)symmetrical information.
• B)adverse selection.
• C)natural selection.
• D)moral hazard.
• E)the winner's curse.

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Definitions:

Investment Banking

A sector of the banking industry that helps individuals and organizations raise capital and provides financial consultancy services.

Securities Act of 1933

A U.S. law enacted to ensure greater transparency in financial statements and to reduce fraud and manipulation in the securities markets.

Prospectus

A formal legal document that provides details about an investment offering for sale to the public, often containing data about the company's operations, financial condition, and management.

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for enforcing federal securities laws and regulating the securities industry.