Question at position 15 A bank starts requiring collateral and adds loan-use restrictions on small business loans.How do these measures reduce asymmetric information problems?They raise profits by increasing interest rates. Collateral reduces adverse selection; restrictions reduce moral hazard.Both primarily address moral hazard.They eliminate the need for borrower monitoring.Single choice

A

They raise profits by increasing interest rates.

B

Collateral reduces adverse selection; restrictions reduce moral hazard.

C

Both primarily address moral hazard.

D

They eliminate the need for borrower monitoring.

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