Banks Help to Overcome the Problem of Asymmetric Information By

question 56

Multiple Choice

Banks help to overcome the problem of asymmetric information by:

• A)lending to a single rich borrower and not diversifying their portfolio.
• B)acquiring expertise in evaluating the credit histories of borrowers.
• C)threatening borrowers.
• D)offering only one type of loan.
• E)providing information to lenders.

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Definitions:

Small Intestine

A part of the digestive system where most of the digestion and absorption of nutrients occurs.

CVA

Cerebrovascular Accident, commonly known as a stroke, occurs when blood flow to a part of the brain is suddenly interrupted or reduced.

Thermoreceptors

Specialized sensory nerve cells that detect changes in temperature and are responsible for sensations of hot and cold.