Question
Please match the following scenario: A) Adverse selection B) Risk aversion C) Default risk D) Liquidity risk E) Moral Hazard 1. A football coach has
Please match the following scenario: A) Adverse selection B) Risk aversion
C) Default risk
D) Liquidity risk
E) Moral Hazard 1. A football coach has already signed a contract to return the following year so he stops putting effort into the practice sessions 2. The second-hand cars being sold on craigslist are more likely to have mechanical problems than the cars that are being kept by their drivers (who want to continue to use them) 3. Farmers who borrowed from a bank cannot repay their loans due to an extensive drought 4.News of turbulent financial markets makes a banks customers nervous and they all decide to withdraw their funds from the bank 5.A very wealthy person chooses to keep all of their savings in a bank account rather than buying shares on the stock exchange
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