The Authors' Analysis of Adverse Selection Indicates That Financial Intermediaries

question 33

Multiple Choice

The authors' analysis of adverse selection indicates that financial intermediaries

• A) overcome free-rider problems by holding nontraded loans.
• B) must buy securities from corporations to diversify the risk that results from holding nontradable loans.
• C) have not been very successful in dealing with adverse selection problems in financial markets.
• D) do all of the above.
• E) do only A and B of the above.

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