Moral hazard is a problem associated with debt and equity contracts arising from:
a. the borrower's incentive to undertake highly risky investments.
b. the owners' inability to ensure that managers will act in the owners' interest.
c. the difficulty lenders have in sorting out good credit risks from bad credit risks.
d. All of these.
e. only the borrower's incentive to undertake highly risky investments and the owners' inability to ensure that managers will act in the owners' interest of these.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Moral hazard is a problem associated with debt and equity contracts arising from: a. the borrower's incentive to undertake highly risky ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
The interest rate at which the Federal Reserve Banks lend to commercial banks is called the bank rate. A. Short-term. B. Prime. C. discount D. Federal funds.
Answers (1)
Adler Company is considering developing a new product. The company has gathered the following information on this product.
Answers (1)
True or false: A resource is said to have a comparative advantage if it is better suited to the production of one good than to the production of another good.
Answers (1)
Jerry lost his credit card and instead of reporting it right away, he decides to continue looking for it believing he could find it.
Answers (2)
Billy, a witness to a motor vehicle accident, is gravely ill with cancer. pat, who was injured in the accident, would like to preserve his testimony for trial in case he dies before the trial date. what should pat do?
Answers (1)
New Questions in Business
A firm has hired you as a consultant. This firm is perfectly competitive and has no control over price. This firm is selling 10,000 units at a price of $2. Total costs are $30,000. Total variable costs are $25,000.
Answers (1)
Stock in 1999 your parents bought $3000 worth of stock. in 2000 the value of the stock jumped to $6000. however since that time, the stock has decreased in value by 6.5% per year.
Answers (1)
True or False: When a country is too small to affect the world price, allowing free trade will have a non-negative effect on total surplus in that country, regardless of whether it imports or exports as a result of international trade. True False
Answers (1)
Assume Canada can either produce three bushels of barley or six bushels of hay in a set period of time, and China can produce either two bushels of barley or three bushels of hay in a set period of time.
Answers (1)
The financial statements for Harold Corporation contained the following information: Accounts receivable $ 5,000 Sales revenue 75,000 Cash 15,000 Salaries and wages expense 20,000 Rent expense 10,000 How much was Harold's net income?
Answers (1)