A Lesson of the Enron Collapse Is That Government Regulation

question 89

Multiple Choice

A lesson of the Enron collapse is that government regulation

• A)always fails.
• B)can reduce but not eliminate asymmetric information problems.
• C)increases the problem of asymmetric information.
• D)should be reduced.

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Definitions:

Cumulative Cash Surplus

The total amount of cash that exceeds the initial investment or expenses over a period.

Minimum Cash Balance

The lowest amount of cash that a company aims to hold in its accounts to ensure financial stability and operational efficiency.

Pledged Financing

Financing obtained by offering assets as collateral to secure the loan, reducing the lender's risk.

Assignment Of Receivables

The transfer of a company's right to receive money from a debtor to another party.