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)lemon problem.
B)moral hazard.
C)adverse selection.
D)asymmetric information.

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation in which one party has more or better information than the other party. In this case, some members of Enron's board of directors have access to information about the company's true financial condition that is not available to most investors, creating a situation of asymmetric information.

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