Moral Hazard Caused by Regulation Can Only Be Removed from Financial

question 11

Multiple Choice

Moral hazard caused by regulation can only be removed from financial transactions if:

• A)regulations are regularly revised to keep pace with the changing circumstances of the market.
• B)the regulations prevent agency capture.
• C)all regulation is self-regulation.
• D)participants in the finance industry do not feel protected by the regulations.

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Definitions:

Social Hierarchy

The organization of individuals into levels of power, status, and authority within a society.

Influencing Factors

Influencing factors are various elements or conditions that affect the outcome or development of a process, decision, or behavior.

Meritocracy

A societal system in which advancement and rewards are based on individual ability and achievement rather than on class privilege or wealth.

Wealth

The abundance of valuable resources or material possessions, or the control of such assets.