Which of the Following Best Demonstrates the Problem of Moral

question 47

Multiple Choice

Which of the following best demonstrates the problem of moral hazard?

• A) Cynthia doesn't buy health insurance because it is too expensive and she is healthy.
• B) A life insurance company forces Tebogo to have a medical examination prior to selling her insurance.
• C) Lerato drives more recklessly after she buys car insurance.
• D) Fatima chooses to attend a well-respected university.

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Definitions:

Fiscal Year-End

The completion of a one-year, or 12-month, accounting period, used by governments and businesses for financial reporting and budgeting, which may or may not align with the calendar year.

Quarter Income Statement

A financial report that summarizes the revenues, expenses, and profits or losses of a company over a three-month period.

Impairment Test

An examination to determine if an asset's carrying value exceeds its recoverable amount, indicating if the asset is impaired.

Future Cash Flows

Estimates of the amount of money expected to be received or paid out over future periods.