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:

Traffic Fatalities

Deaths resulting from accidents or collisions involving vehicles on roadways.

Alcohol

A chemical compound characterized by a hydroxyl group (-OH) attached to a carbon atom, commonly used in beverages for consumption, cleaning agents, and fuel.

Each Year

An expression referring to the occurrence of an event or the measurement of data on an annual basis.

Carcinogens

Substances or exposures that are known to lead to cancer formation in living tissues.