Question: Which statement best explains adverse selection? The term refers to the fact that some people have more information than others. The term refers to the

Which statement best explains "adverse selection"?

The term refers to the fact that some people have more information than others. The term refers to the need external parties have for financial information. The term refers to a situation where one party cannot observe the actions of another party.The term refers to a situation where one party has an information advantage over another.

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