Which one of the following does not explain why banks enjoy lower asymmetry of information?
A)The bank has access to the firm's financial activity.
B)The company relies on the bank for financing and other hedging activities.
C)The company is required by law to give the bank access to privileged information.
D)The company provides information to negotiate banking products.

Question

Quizplus · Accepted Answer

While the three other choices explain how banks have access to information about the companies they work with, choice C suggests that companies are required by law to give banks access to privileged information. This is not necessarily true, and some information may remain private and only shared on a need-to-know basis. Therefore, choice C does not explain why banks enjoy a lower asymmetry of information.

Which One of the Following Does Not Explain Why Banks