Blackboard QUESTION 4 The bond rating system, in which companies like Moody\'s a

Question

Blackboard QUESTION 4 The bond rating system, in which companies like Moody's and Standard&Poor;'s provide ratings for a company's default risk, is coe way to deal with o a moral selection ric information selection QUESTION 5 In the market for used cars, asymmetric information will tend to O a drive the clunker used cars out of the market. o b. lead to a highly efficient market. c, drive the better used cars out of the market. o d have no impact on the market for used cars QUESTION 6 se The result of asymmetric information in a market is b. careful c inrational d adverse QUESTION 7

Explanation / Answer

4 d is correct as this will lead to diffrentiating companies on the basis of default risk

5 c is correct as the seller who knows that his car is better will not sell it

6 d adverse selection happens due toa assymetric information

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