There Are Obvious Incentives to Overcome Adverse Selection and Moral

question 159

Multiple Choice

There are obvious incentives to overcome adverse selection and moral hazard problems in the world of corporate finance. One way in which problems of moral hazard and adverse selection can be limited is through the use of programs in which managers and employees receive a share of profits earned by the firm. These programs are commonly known as

• A)fair profit exchange agreements.
• B)profit sharing agreements.
• C)earnings compatibility constraints.
• D)corporate earnings fairness.
• E)the economy of communion.

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