Explain the Significance of NSC-68

question 16

Essay

Explain the significance of NSC-68.

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Definitions:

Moral Hazard

A situation in which one party is more willing to take risks because the costs that may result will not be borne by them.

Adverse Selection

A situation in which asymmetric information leads to the market being dominated by inferior products or by participants who are at a disadvantage.

Moral Hazard

A situation where one party in a transaction has the opportunity to take risks because the costs that those risks entail will not be borne by that party.

Portfolio Risk

The variability of returns from a portfolio of investments.