When the lender and the borrower have different amounts of information regarding a transaction,________ is said to exist.
A) asymmetric information
B) adverse selection
C) moral hazard
D) fraud

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation in which one party in a contract or transaction has more information than the other, leading to a power imbalance and potentially negative outcomes for the less-informed party.

When the Lender and the Borrower Have Different Amounts of Information