Identify whether each of the following is an example of adverse selection or moral hazard. A. Joe begins smoking in bed after buying fire insurance. B. Both of Susan’s parents lost their teeth to gum disease, so Susan buys dental insurance. C. When Gertrude parks her Corvette convertible, she does not bother putting the top up, because her insurance covers theft of any items left in the car.

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A: Req-a-i     Project A     Year Cash Flow Cumulative Cash Flow Year 0 -$250 -$250 Year 1 $240...

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A: We will use the dividend discount model here. 

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A:

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Adverse Selection