The Government Safety Net Creates ________ Problem Because Risk-Loving Entrepreneurs

question 59

Multiple Choice

The government safety net creates ________ problem because risk-loving entrepreneurs might find banking an attractive industry.

• A)an adverse selection
• B)a moral hazard
• C)a lemons
• D)a revenue

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Definitions:

Market Price

The market value at which a service or asset is currently traded.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy a specified quantity of an asset at a set price within a specified time.

Strike Price

The rate at which an option's owner has the right to purchase (for a call option) or offload (for a put option) the underlying asset or commodity.

Market Price

The current price at which an asset or service can be bought or sold.