If firm-level asymmetric information becomes more severe,then
A) investment demand increases.
B) investment demand decreases.
C) investment demand does not change.
D) it is impossible to tell.

Question

Quizplus · Accepted Answer

If firm-level asymmetric information becomes more severe, potential investors will have a harder time distinguishing between good and bad investment opportunities. Thus, investors may become more cautious and reduce their investment demand, resulting in a decrease in investment.

If Firm-Level Asymmetric Information Becomes More Severe,then