Suppose some members of Enron's board of directors are aware of the company's true financial condition,information that is not available to most investors.This is an example of
A) the lemons problem.
B) moral hazard.
C) adverse selection.
D) asymmetric information.

Question

Quizplus · Accepted Answer

Asymmetric information refers to situations where one party in a transaction has more information than the other party. In this case, the members of Enron's board of directors have information about the company's financial condition that is not available to most investors, creating an uneven distribution of information.

Suppose Some Members of Enron's Board of Directors Are Aware