When lenders have inferior knowledge relative to borrowers about the potential returns and risks associated with an investment project, it gives rise to the problem known as
A. asymmetric information.
B. transaction costs.
C. financial intermediation.
D. asset transformation.
After a loan is made, banks monitor their loan customers to avoid the problem of
A. risk sharing.
B. moral hazard.
C. asset transformation.
D. adverse selection.
