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Question 3 ---Adverse Selection Compose a brief definition of Adverse Selection. Explain how Adverse Selection affects the lending market. If you prefer, you can present

Question 3 ---Adverse Selection

  1. Compose a brief definition of Adverse Selection. Explain how Adverse Selection affects the lending market. If you prefer, you can present your definition through an example.

[15 marks]

  1. Explain what actions taken by H&H Bail Bonds firm created adverse selection and how that impacted its profitability.

[10 marks]

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