Although Debt Contracts Require Less Monitoring Than Equity Contracts,debt Contracts

question 90

Multiple Choice

Although debt contracts require less monitoring than equity contracts,debt contracts are still subject to ________ since borrowers have an incentive to take on more risk than the lender would like.

• A)moral hazard
• B)agency theory
• C)diversification
• D)the "lemons" problem

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Definitions:

Double-Consciousness

W. E. B. DuBois’s term for the divided identity experienced by blacks in the United States.

Du Bois

W.E.B. Du Bois, an American sociologist, historian, and civil rights activist known for his significant contributions to the study of African-American culture and history.

Black

Refers to a color in the visible spectrum, often symbolizing depth, mystery, or the absence of color; in socio-cultural contexts, it can denote racial or ethnic identity.

American

Pertaining to the United States of America, its people, culture, or characteristics.