Moral hazard and adverse selection issues likely contributed to the sub prime mortgage problems during the 2007 2008 recession Give an example of how moral hazard could be a problem in a simple mortgage market with borrowers and lenders Give an example of how adverse selection could be a problem in a simple mortgage market with borrowers and lenders How would the process of bundling mortgages together into a security for investors (Mortgage backed securities) affect information asymmetries

Question: Moral hazard and adverse selection issues likely contributed to the sub-prime mortgage problems during the 2007-2008 recession. Give an example of how moral hazard could

Moral hazard and adverse selection issues likely contributed to the sub-prime mortgage problems during the 2007-2008 recession.
1. Give an example of how moral hazard could be a problem in a simple mortgage market with borrowers and lenders.
2. Give an example of how adverse selection could be a problem in a simple mortgage market with borrowers and lenders.
3. How would the process of bundling mortgages together into a security for investors (Mortgage-backed-securities) affect information asymmetries?

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