High Net Worth Helps to Diminish the Problem of Moral

question 80

Multiple Choice

High net worth helps to diminish the problem of moral hazard problem by

• A)requiring the state to verify the debt contract.
• B)collateralizing the debt contract.
• C)making the debt contract incentive compatible.
• D)giving the debt contract characteristics of equity contracts.

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Definitions:

Investment

The action of allocating resources, usually money, with the expectation of generating an income or profit.

Quarter

One fourth of a given quantity, often referring to a quarter of a year or a quarter of an hour (15 minutes).

Percent Decrease

A measure of how much a quantity has decreased in percentage terms compared to its previous value.

Percent Increase

The process of determining the ratio of the increase in a quantity to the original amount, expressed as a percentage.