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.

---

Definitions:

Positioning Criteria

Factors or attributes used by marketers to establish a product's image and identity in the minds of the target market relative to competitors.

Perceptual Map

A visual representation that displays consumers’ perceptions of a brand or product in relation to others within the marketplace.

Variable Costs

Costs that vary directly with the level of production or the volume of services rendered, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business.