Monitoring Is One Means by Which Creditors Can Control a Borrower's

question 1

Multiple Choice

Monitoring is one means by which creditors can control a borrower's incentive to expropriate wealth from the creditors.However, direct monitoring of a borrower's actions is more difficult in a public bond issue than in a private bond issue because of the:

• A)free-rider problem.
• B)requirement of registration with the SEC for a public bond issue.
• C)moral hazard problem.
• D)adverse selection problem.