The Moral Hazard That Can Result from Debt Financing Is

question 11

Multiple Choice

The moral hazard that can result from debt financing is mainly due to the:

• A) borrower not working as hard once he or she obtains the loan.
• B) borrower wanting to refinance the loan.
• C) borrower taking greater risk in hopes of obtaining a larger return.
• D) economy turning sour and the borrower defaulting.

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