Characteristics of good collateral include Adverse selection

Characteristics of good collateral include:

Adverse selection in lending means that ___________ borrowers are willing to pay the average rate of interest, while __________ borrowers are not. The result is that banks wind up with _________ risk borrowers.

Which of the following are broad types of funding banks use?

Which of the following are purchased funds?

Solution

E) All of the above

D) high risk; low risk; higher than average

C) Long Term Funding

E) None of the above