One Reaction of Firms to the Adverse Selection Problem Is

question 65

Multiple Choice

One reaction of firms to the adverse selection problem is to

• A)rely on internal funds to finance investment.
• B)use the stock market rather than the bond market to raise funds.
• C)use the bond market rather than the stock market to raise funds.
• D)borrow long-term rather than short-term.

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Definitions:

Law Firm

A business entity formed by one or more lawyers to engage in the practice of law, providing legal services to clients.

Medical Center

A comprehensive health care facility that provides a wide range of medical services including diagnostics, treatment, and surgery.

Corporation

A corporation is a legal entity that is separate and distinct from its owners, authorized to act as a single entity and recognized as such in law for the purposes of conducting business, borrowing funds, suing, and being sued.

Accounts Payable

Money owed by a company to its creditors for goods or services that have been delivered but not yet paid for.