An Example of Moral Hazard Is

question 12

Multiple Choice

An example of moral hazard is

• A)workers shirking when the boss is not looking
• B)health care insured dieting and exercising
• C)drivers of safer cars turning their phones off before driving
• D)borrowers investing their loan proceeds exactly as the bank requires

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations by comparing current assets to current liabilities.

Inventory Turnover Ratio

A measure of how frequently a company sells and replaces its inventory over a certain period; calculated as cost of goods sold divided by the average inventory.

Inventory Turnover Ratios

A financial metric indicating the number of times a company’s inventory is sold and replaced over a specified period, critical for evaluating inventory efficiency.

Quick Ratios

A financial metric used to gauge a company's liquidity by comparing its most liquid assets, without inventory, to its current liabilities.