Moral Hazard Occurs ________ an Agreement Is Made and When

question 111

Multiple Choice

Moral hazard occurs ________ an agreement is made and when monitoring the parties to the agreement is ________.

• A) before; easy
• B) before; costly
• C) after; easy
• D) after; costly

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Definitions:

Negotiates

The act of discussing something formally to reach an agreement or compromise on terms.

UCC

The Uniform Commercial Code represents an extensive collection of legislation that oversees business dealings in the United States.

Negotiable Interest

An interest in a financial asset, like a note or draft, that can be transferred from one party to another in a manner that the transferee gains legal ownership and the right to enforce the instrument.

Primarily Liable

Having the main or first responsibility for fulfilling an obligation or debt.