High Net Worth Helps to Diminish the Problem of Moral

question 80

Multiple Choice

High net worth helps to diminish the problem of moral hazard problem by

• A)requiring the state to verify the debt contract.
• B)collateralizing the debt contract.
• C)making the debt contract incentive compatible.
• D)giving the debt contract characteristics of equity contracts.

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Definitions:

Gross Profit

The difference between the revenue generated from sales and the cost of goods sold, before deducting overheads, payroll, taxation, and interest payments.

Perpetual Inventory System

It's a method in accounting where inventory sales and purchases are registered immediately using automated point-of-sale systems and enterprise asset management programs.

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed by the buyer to the seller, typically due to a return or rebate.

Discount Period

The time period during which a debtor can pay less than the full amount owed to clear a debt, typically as an incentive for early payment.