Asymmetric information means
A) after the loan is made, the borrower has an incentive to use the proceeds for a more risky venture.
B) the borrower knows more about the risks of a project than the lender.
C) the worst borrowers will pursue the loan most diligently.
D) the benefits of the loan must be greater than the costs.

Question

Quizplus · Accepted Answer

Asymmetric information refers to a situation where one party (in this case, the borrower) has more or better information than the other party (the lender) about an important aspect of a transaction or situation, such as the risks involved in a project.

Asymmetric Information Means