When collateral is used as a screening device in conjunction with interest rate, a high risk borrower chooses a contract with , while a low risk borrower chooses the one with .
A)high collateral-high interest rate, low collateral-low interest rate
B)low collateral-low interest rate, high collateral-high interest rate
C)high collateral-low interest rate, low collateral-high interest rate
D)low collateral-high interest rate, low collateral-low interest rate
E)low collateral-high interest rate, high collateral-low interest rate

Question

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The Answer of When collateral is used as a screening device in conjunction with interest rate, a high risk borrower chooses a contract with , while a low risk borrower chooses the one with .
A)high collateral-high interest rate, low collateral-low interest rate
B)low collateral-low interest rate, high collateral-high interest rate
C)high collateral-low interest rate, low collateral-high interest rate
D)low collateral-high interest rate, low collateral-low interest rate
E)low collateral-high interest rate, high collateral-low interest rate

When Collateral Is Used as a Screening Device in Conjunction