The assumption of asymmetric information means that borrowers know more than lenders.
Hence, Option C is correct.
What do you mean by asymetric information?
- Information asymmetry is the study of decisions in transactions where one party has more or better information than the other. It is a topic covered in contract theory and economics.
- When one party to an economic transaction has more or better information than the other and takes advantage of that information to their advantage, there is an information imbalance. Market failures result from this, with instances like adverse selection and the "lemons dilemma"
- Asymmetric knowledge comes in two forms: moral hazard and adverse selection. When one party has more information than the other, there is an information imbalance, which is referred to as adverse selection.
To know more about asymmetric information here
https://brainly.com/question/15345064
#SPJ4
