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Chapter 2 Reading - Questions

Chapter 2 Reading - Questions -...

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Article:  Kim Hart, "From the Ground Up," Washingtonpost.com, August 24, 2008. Available at  http://www.washingtonpost.com/wp-dyn/content/article/2008/08/22/AR2008082203338.html   This article highlights several companies that facilitate peer-to-peer lending networks. The article describes how the  peer-to-peer lending process works and considers some of the benefits and risks involved for borrowers and lenders.  Questions for Discussion   1. Define the following terms and phrases used in or related to this article:  a. financial intermediaries  b. indirect finance  c. transaction costs  d. asymmetric information  e. adverse selection  f. moral hazard  g. diversification  h. default  2. What is peer-to-peer lending? How does it differ from lending through traditional channels?  3. How does Prosper bring potential borrowers and lenders together? Describe the process  from both the borrower's and the lender's perspectives. 
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Chapter 2 Reading - Questions -...

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