3. There are many regulations put on financial intermediaries. (Regulations made by government regulators.)

a. Give one example of an asymmetric information problem in financial markets. Explain briefly how this is an asymmetric information issue and why this may be a problem.

b. List two regulations of financial markets or institutions. Using one paragraph for each regulation, explain briefly the regulation and HOW this regulation reduces asymmetric information or reduces the consequences of asymmetric information in financial markets. (You can discuss asymmetric information or use the terminology of moral hazard and/or adverse selection.)