The Problem of Adverse Selection Helps to Explain

question 69

Multiple Choice

The problem of adverse selection helps to explain

• A) which firms are more likely to obtain funds from banks and other financial intermediaries, rather than from securities markets.
• B) why collateral is an important feature of consumer, but not business, debt contracts.
• C) why direct finance is more important than indirect finance as a source of business finance.
• D) only A and B of the above.

---

Definitions:

User Name

A unique identifier assigned to an individual to access a computer system or service.

Specific User

An individual with unique access permissions or settings within a software application or system.

Windows

A graphical interface system developed by Microsoft, providing a visual way to interact with computers through windows, icons, and menus.

Collection

An arrangement of items, such as data, books, or artworks, that are systematically gathered for study, comparison, or exhibition.