Which of the Following Is an Example of a Moral

question 22

Multiple Choice

Which of the following is an example of a moral hazard?

• A) A CEO is awarded $100,000 worth of executive stock options, which he exercises two years later for $1,000,000.
• B) A company borrows $1,000,000 for investment in equipment, but uses the money instead to repurchase stock.
• C) A company declares bankruptcy, but instead of being liquidated, it is reorganized and one set of bondholders who are owed $10 million accept $3 million in payment for the debt.
• D) A CEO orders the headquarters moved just so he can have a nicer office.
• E) A group of institutional stockholders votes to oust management.

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Definitions:

Extras

Extras refers to additional items or people beyond what is necessary, often enhancing or completing something.

Attentional Blink

A momentary lapse in visual processing that occurs when two stimuli are presented in close succession.

Stroop Effect

A demonstration of interference in the reaction time of a task, where naming the color of the word takes longer and is more prone to errors when the color of the ink does not match the name of the color.

Synaptic Connections

The points at which neurons communicate with each other through the release and reception of chemical messengers called neurotransmitters.