A bank offers credit cards with a 25 percent interest rate, when its competitors’ cards have just a 15 percent interest rate. Despite the high rate, the bank finds itself losing money because many of its customers fail to repay the balances on their cards. The bank’s losses are most likely to have occurred because of

Answer: Correct answer isĀ  Adverse Selection

bad management.
the lock-in effect.
redlining.
adverse selection.
A bank offers credit cards with a 25 percent interest rate, when its competitors’ cards have just a 15 percent interest rate Answer