Moral Hazard Can Be Reduced By

question 47

Multiple Choice

Moral hazard can be reduced by:

• A)the use of 100% insurance coverage.
• B)imposing a deductible on insurance coverage.
• C)taking away personal stakes for people with private information.
• D)offering fewer incentives to people with private information to act in a less risky manner.

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Definitions:

Face Value

The nominal or dollar value printed on a bond, note, or other financial instrument, indicating its worth at maturity.

Treasury Bond

A long-term government bond issued by the U.S. Treasury with a maturity period typically ranging from 20 to 30 years.

Face Value

The nominal or original value written on a financial instrument, such as a bond or stock certificate, not necessarily reflecting its market value.

Semi-Annual Coupon Bonds

Bonds that pay interest to holders twice a year, typically known for providing a steady income stream to investors.