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One of my relatives is ineligible for financial assistance from the bank. In order to help her, I decide to take a home improvement loan
One of my relatives is ineligible for financial assistance from the bank. In order to help her, I decide to take a home improvement loan from the bank and further lend it to my relative. The bank is exposed to;
a. Adverse selection only
b. Moral hazard only
c. Adverse selection as well as moral hazard.
d. Higher transaction cost
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