1. The concept of moral hazard
A. Refers to the high rejection rates faced by loan applicants.
B. Refers to the tendency of borrowers to undertake risky loans.
C. Refers to the negative effects on the quality of the pool of loan applicants when banks try to use
a single interest rate
D. To cover expected default costs.
E. Refers to the incentive of borrowers to shift to more risky loan projects after their loan
contracts are signed�
1 answer
B. Refers to the tendency of borrowers to undertake risky loans.
1 answer