Financial Intermediaries Typically Require Mortgage Borrowers to Have Homeowner's Insurance

question 50

Multiple Choice

Financial intermediaries typically require mortgage borrowers to have homeowner's insurance and do credit checks before making the loan.

• A)The insurance requirement and the credit check are both designed primarily to reduce adverse selection.
• B)The insurance requirement and the credit check are both designed primarily to reduce the risk of moral hazard.
• C)The insurance requirement is designed primarily to reduce adverse selection;the credit check is designed primarily to reduce the risk of moral hazard.
• D)The insurance requirement is designed primarily to reduce the risk of moral hazard;the credit check is designed primarily to reduce adverse selection.

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