Tools to help solve the adverse selection problem in financial markets include all of the following EXCEPT
A)diversification.
B)government regulations to increase information.
C)the use of financial intermediaries.
D)the private production and sale of information.

Question

Quizplus · Accepted Answer

Diversification is a strategy used to reduce risk by allocating investments among various financial instruments, industries, and other categories. It does not directly address the adverse selection problem, which involves asymmetric information between buyers and sellers. Government regulations, financial intermediaries, and the private production and sale of information all aim to reduce information asymmetry, thereby mitigating adverse selection.

Tools to Help Solve the Adverse Selection Problem in Financial