Robert borrowed $15,000 from Granite Bank,telling the loan officer that he intended to use the money to make repairs to his home.After getting the loan,Robert and his girlfriend immediately took the $15,000 and headed to Las Vegas for a weekend of gambling and entertainment.Which statement best characterizes this principal and agent problem
A) This is a problem of moral hazard, but it is not a problem of asymmetric information.
B) This is a problem of asymmetric information, but it is not a problem of moral hazard.
C) From the given information, it is correct to say that Robert is a principal and that his girlfriend is an agent.
D) From the given information, it is correct to say that Granite Bank is a principal and that Robert is an agent.
Correct Answer:
Verified
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