Two types of asymmetric information that create problems for international investment are

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Adverse selection is a situation where one party in a transaction has more information than the other party, leading to the risk of the party with less information making a decision that is unfavorable to them. In the context of international investment, this could occur if a foreign firm has more information about the state of their economy or political situation than the domestic firm investing in them. Moral hazard, on the other hand, occurs when one party takes more risks because they know the other party will pay for the consequences. In the context of international investment, this could occur if a foreign firm takes on excessive risks with the understanding that the domestic firm will absorb any losses. Thus, C is the correct choice as it includes adverse selection and moral hazard, which are the two types of asymmetric information that can create problems for international investment.

Two Types of Asymmetric Information That Create Problems for International