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Both Bob and Peter submitted their loan applications to NOLA Bank for $50K each. Bob is a less risky borrower than Peter. Would the bank

Both Bob and Peter submitted their loan applications to NOLA Bank for $50K each. Bob is a less risky borrower than Peter. Would the bank be able to earn the average expected return if it decides to charge an average interest rate for both? Identify whether it is an example of a moral hazard or adverse selection problem and then explain the concepts.

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