Question: b. Financial intermediaries reduce adverse selection and moral hazard problems, enabling them to make profits. Discuss the merits of the above statement explaining what is

b. "Financial intermediaries reduce adverse selection and moral hazard problems, enabling them to make profits." Discuss the merits of the above statement explaining what is me ant by "adverse selection" and "moral hazard" problems, and determine how financial intermediaries are able to reduce these problems while remaining profitable. Include in yoour discussion the role of the regulator and the measures that regulators may put in place to er nsure the soundness of financial intermediaries. (7.5 Marks)

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