The Moral Hazard Associated with Managers Whose Productivity Is Difficult

question 3

Multiple Choice

The moral hazard associated with managers whose productivity is difficult to quantify can be decreased with

• A)piece-rate contracts.
• B)year-end bonuses.
• C)decreased wages.
• D)adverse selection.

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Definitions:

Common Stock

Equity owning in a firm that grants shareholders voting rights and a share in the company's profits, typically through dividends.

Database

A structured set of data held in a computer, especially one that is accessible in various ways, used for storing and managing information digitally.

Amortized

The process of gradually paying off a debt over a period of time through regular payments.