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Due to the information asymmetry, a bank is not able to monitor its loan borrowers' operation. So the bank charges each loan an interest rate

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Due to the information asymmetry, a bank is not able to monitor its loan borrowers' operation. So the bank charges each loan an interest rate which is calculated based on the loan borrower's credit quality as of the loan issuing date, and keeps the interest rate fixed throughout the loan contracting term. What issue would the bank face by doing so? Select one: a. Moral hazard b. Adverse selection c. High price risk d. High liquidity cost e. High transaction cost

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