Adverse selection - Revision history

imported>Doug Williamson: Amend headers.

2021-05-27T11:23:12Z

Amend headers.

← Older revision		Revision as of 11:23, 27 May 2021
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	1.		1. ''Project appraisal''.

	''Project appraisal''.

	The problems of accepting projects which should be rejected, or rejecting ones which should be accepted.		The problems of accepting projects which should be rejected, or rejecting ones which should be accepted.
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	2.		2. ''Markets''

	Any market situation in which there is asymmetry of information between the participants, potentially leading to the market being illiquid because fewer participants are willing to trade.		Any market situation in which there is asymmetry of information between the participants, potentially leading to the market being illiquid because fewer participants are willing to trade.
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	== See also ==		== See also ==
			* [[Anti-selection]]
	* [[Asymmetry of information]]		* [[Asymmetry of information]]
	* [[Cost of capital]]		* [[Cost of capital]]
	* [[Liquidity risk]]		* [[Liquidity risk]]
	* [[Project appraisal]]		* [[Project appraisal]]
			* [[Project management]]
	* [[Weighted average cost of capital]]		* [[Weighted average cost of capital]]
	* [[Anti-selection]]

	[[Category:Planning_and_projects]]		[[Category:Planning_and_projects]]
	[[Category:Liquidity_management]]		[[Category:Liquidity_management]]

imported>Doug Williamson: Add category.

2020-10-08T13:48:26Z

Add category.

← Older revision		Revision as of 13:48, 8 October 2020
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	* [[Weighted average cost of capital]]		* [[Weighted average cost of capital]]
	* [[Anti-selection]]		* [[Anti-selection]]

			[[Category:Planning_and_projects]]
			[[Category:Liquidity_management]]

imported>Doug Williamson: Expand. Source: BIS working paper 479 http://economics.mit.edu/files/9777

2016-08-13T15:01:19Z

Expand. Source: BIS working paper 479 http://economics.mit.edu/files/9777

← Older revision		Revision as of 15:01, 13 August 2016
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			1.

	''Project appraisal''.		''Project appraisal''.

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	For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate new projects whose risk differs from the average risk of the firm's existing business.		For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate new projects whose risk differs from the average risk of the firm's existing business.


			2.

			Any market situation in which there is asymmetry of information between the participants, potentially leading to the market being illiquid because fewer participants are willing to trade.


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	== See also ==		== See also ==
			* [[Asymmetry of information]]
	* [[Cost of capital]]		* [[Cost of capital]]
			* [[Liquidity risk]]
	* [[Project appraisal]]		* [[Project appraisal]]
	* [[Weighted average cost of capital]]		* [[Weighted average cost of capital]]
	* [[Anti-selection]]		* [[Anti-selection]]

imported>Doug Williamson: Link with Anti-selection page.

2014-11-22T16:21:52Z

Link with Anti-selection page.

← Older revision		Revision as of 16:21, 22 November 2014
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	For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate new projects whose risk differs from the average risk of the firm's existing business.		For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate new projects whose risk differs from the average risk of the firm's existing business.



			Adverse selection is not to be confused with ''anti-selection'', which is different.


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	* [[Project appraisal]]		* [[Project appraisal]]
	* [[Weighted average cost of capital]]		* [[Weighted average cost of capital]]
			* [[Anti-selection]]

imported>Doug Williamson: Clarify wording by adding "new".

2014-03-13T12:12:24Z

Clarify wording by adding "new".

← Older revision		Revision as of 12:12, 13 March 2014
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	One cause of adverse selection is using the wrong cost of capital for making the evaluation.		One cause of adverse selection is using the wrong cost of capital for making the evaluation.

	For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate projects whose risk differs from the average risk of the firm's existing business.		For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate new projects whose risk differs from the average risk of the firm's existing business.

imported>Doug Williamson: Create the page. Source: ACT Corporate Finance and Funding exam solution October 2013, page 11.

2014-03-13T12:11:02Z

Create the page. Source: ACT Corporate Finance and Funding exam solution October 2013, page 11.

New page

''Project appraisal''.

The problems of accepting projects which should be rejected, or rejecting ones which should be accepted.

One cause of adverse selection is using the wrong cost of capital for making the evaluation.

For example using a cost of capital which is either too low or too high, because of failing to take appropriate account of the relevant risk of the project under review. This can happen when a firm's existing average cost of capital is used to evaluate projects whose risk differs from the average risk of the firm's existing business.

== See also ==

* [[Cost of capital]]
* [[Project appraisal]]
* [[Weighted average cost of capital]]