Increased complexity of structured products can ________.
A) destroy information and improve adverse selection problems
B) increase information and worsen adverse selection problems
C) make asymmetric information better in the financial system
D) make asymmetric information worse in the financial system

Question

Quizplus · Accepted Answer

Increased complexity of structured products can create opaque and intricate structures, making it difficult for investors to fully understand the risks and rewards of the investment. This can worsen the problem of asymmetric information in the financial system, as investors may not have access to all the information they need to make informed decisions. Therefore, choice D, "make asymmetric information worse in the financial system," is the correct answer.

Increased Complexity of Structured Products Can ________