In financial markets,lenders typically have inferior information about potential returns and risks associated with any investment project.This difference in information is called
A) comparative informational disadvantage.
B) asymmetric information.
C) variant information.
D) caveat venditor.

Question

Quizplus · Accepted Answer

Asymmetric information refers to the difference in information between lenders and borrowers. In financial markets, borrowers often have better information about the potential returns and risks associated with an investment project, which can put lenders at a disadvantage. Asymmetric information can lead to issues such as adverse selection and moral hazard.

In Financial Markets,lenders Typically Have Inferior Information About Potential Returns