If knowledge possessed by one party in a financial transaction is NOT known to the other party, ________ exists.

Question

Quizplus · Accepted Answer

When one party has more information than the other party in a financial transaction, it is called asymmetric information. This can lead to situations such as adverse selection and moral hazard, where one party takes advantage of the other party's lack of knowledge. Disintermediation refers to the removal of intermediaries in a financial transaction, fraud refers to intentional deception, and no financial intermediation is not a relevant term in this context.

If Knowledge Possessed by One Party in a Financial Transaction