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Explain the concept of moral hazard. Give an example.
Bond Indenture
A legal contract detailing the terms and conditions under which bonds are issued, including the interest rate, maturity date, and other conditions.
Time Premium
The portion of an option's price that exceeds its intrinsic value, reflecting the value of time left until expiration.
Exercise Price
The price at which an option holder can buy or sell the underlying security.
American Put
A type of put option that can be exercised at any time before its expiration date, giving the holder the right to sell the underlying asset at the strike price.
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