1.)How does the concept of asymmetric information help us understand the role of banks in the 2008/2009 global financial crisis in relation to credit crunch? A. Banks were reluctant to lend to households and firms because they did not know the risks involved. B. Banks were reluctant to lend to each other because they knew that risk was widespread because of large holdings of financial assets that were hard to value, and whose distribution amongst banks was unknown. C. Households were reluctant to lend to banks because they could not assess their risk. D. Central banks were reluctant to provide liquidity because they could not make an accurate assessment of which banks were solvent
1.)How does the concept of asymmetric information help us understand the role of banks in the 2008/2009 global financial crisis in relation to credit crunch? A. Banks were reluctant to lend to households and firms because they did not know the risks involved. B. Banks were reluctant to lend to each other because they knew that risk was widespread because of large holdings of financial assets that were hard to value, and whose distribution amongst banks was unknown. C. Households were reluctant to lend to banks because they could not assess their risk. D. Central banks were reluctant to provide liquidity because they could not make an accurate assessment of which banks were solvent
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1.)How does the concept of asymmetric information help us understand the role of banks in the 2008/2009 global financial crisis in relation to credit crunch?
A. Banks were reluctant to lend to households and firms because they did not know the risks involved.
B. Banks were reluctant to lend to each other because they knew that risk was widespread because of large holdings of financial assets that were hard to value, and whose distribution amongst banks was unknown.
C. Households were reluctant to lend to banks because they could not assess their risk.
D. Central banks were reluctant to provide liquidity because they could not make an accurate assessment of which banks were solvent
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