Typically,borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is called
A)moral selection.
B)risk sharing.
C)asymmetric information.
D)adverse hazard.

Question

Quizplus · Accepted Answer

Asymmetric information refers to the difference in information between borrowers and lenders. Option A, moral selection, refers to the tendency of higher-risk borrowers to be more likely to seek out loans, while option B, risk sharing, refers to the allocation of risk between parties in a transaction. Option D, adverse hazard, is not a recognized term in the context of finance or economics.

Typically,borrowers Have Superior Information Relative to Lenders About the Potential