Adverse selection is caused by​

A) ​Hidden actions
B) Hidden information
C) Both of the above
D) ​None of the above

The City of Greenville condemned 300 acres of Kayla's farmland.Kayla's land was worth $250,000 and her basis was $62,500.In payment to Kayla,the city gave Kayla 500 acres of similar land.An appraisal indicated that the land Kayla received was worth $265,000.What is Kayla's recognized gain or loss on the involuntary conversion and what is her basis in the land received?

A) $0 gain and $62,500 basis.
B) $0 gain and $262,500 basis.
C) $15,000 gain and $265,000 basis.
D) $202,500 gain and $265,000 basis.