Asymmetric information poses two important obstacles to the smooth flow of funds from savers to investors. They are

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adverse selection and moral hazard, both of which occur before the transaction.

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moral hazard, which arises before the transaction occurs, and adverse selection, which occurs after the transaction.

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adverse selection and moral hazard, both of which occur after the transaction.

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adverse selection, which arises before the transaction occurs, and moral hazard, which occurs after the transaction.

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