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Which of the following statements about the principal-agent problem in the mortgage market are true?...

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Finance

Which of the following statements about the principal-agent problem in the mortgage market are true?

I. The agent is the entity that buys the loan

II. Agents may act in their own best interests in a way that hurts the principal

III. The principal-agent problem arises in this setting because the loan originator is not sufficiently incentivized to ensure that the loans they make are to creditworthy buyers

A. I and II

B. I only

C. II and III

D. III only

E. I, II, and III

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