E-Book, Englisch, 19 Seiten
ISBN: 978-3-638-11165-2
Verlag: GRIN Verlag
Format: PDF
Kopierschutz: 0 - No protection
It occurs when financial decisions have to be made with an amount of uncertainty about the pay-off of the financial transaction. This is because of insufficient knowledge about the other party involved in the transaction, which is called incomplete or asymmetric information. This lack of information makes it difficult to decide accurately and creates a problem on two fronts, before and after the transaction. (Mishkin, 2001, p. 34-35, 187)