Unformatted text preview: 5. Would moral hazard and adverse selection still arise in ﬁnancial mar-kets if information was not asymmetric? 6. Which ﬁrms are most likely to use bank ﬁnancing rather than to issue bonds or stocks to ﬁnance their activities? Why? 7. The more collateral there is backing a loan, the less the lender has to worry about adverse selection. Is this statement true, false or uncer-tain? Explain your answer. 1...
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This note was uploaded on 07/02/2009 for the course ECON 0280 taught by Professor Jamesmaloy during the Summer '09 term at Pittsburgh.
- Summer '09