The main reason that markets for finance do not resemble simple auction markets, such as the market for wheat, is that
A)markets for finance tend to be dominated by a few large lenders.
B)because of asymmetric information, savers must spend resources to learn about borrowers.
C)markets for finance are much more closely regulated by the government than are other markets.
D)simple auction markets usually suffer from excess demand for their products.

Question

Quizplus · Accepted Answer

Markets for finance involve the trading of financial instruments that have complex payoffs and risks, which require savers to expend resources to learn about borrowers. Asymmetric information and the need for due diligence make these markets more complicated than simple auction markets, like the market for wheat, where the products being sold are standard and easily quantifiable.

The Main Reason That Markets for Finance Do Not Resemble