Moral Hazard Occurs When

question 5

Multiple Choice

Moral hazard occurs when:

• A) the failure of one financial institution can bring down other institutions as well.
• B) financial institutions take on too much risk because they are insured.
• C) financial institutions become insolvent because they issued too many loans.
• D) there are more short-term liabilities than short-term assets.

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Definitions:

Foundation

An entity established to allocate funds or support to causes and activities according to its mission, often for charitable, educational, or research purposes.

Profit À Prendre

is a legal term denoting the right to take something from another's land, such as natural resources, for use or sale.

Dominant Property

The property that benefits from an easement, which is a right to cross or otherwise use someone else's land for a specified purpose.

Trade Fixtures

Items of personal property brought upon the land by a tenant that are necessary to carry on the trade or business to which the premises will be devoted. Contrary to the general rule, trade fixtures remain the personal property of the tenant and are removable at the expiration of the terms of occupancy.