- CFA Exams
- CFA Level I Exam
- Study Session 4. Economics
- Reading 12. Economics of Regulation
- Subject 1. Overview of Regulation
CFA Practice Question
An insured person may choose to conceal certain unhealthy habits or genetic traits that make the health insurance attractive for the person but unprofitable for the company. This is an example of:
B. moral hazard.
C. regulatory capture.
A. adverse selection.
B. moral hazard.
C. regulatory capture.
Correct Answer: A
The person getting insured has more information about the quality of his or her health than the insurance company.
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