Which One of These Terms Refers to a Conflict of Interest

question 1

Multiple Choice

Which one of these terms refers to a conflict of interest between the stockholders and managers of a corporation?

• A)Stakeholder claim
• B)Corporate activism
• C)Legal liability
• D)Breach of indemnity
• E)Agency problem

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Definitions:

Moral Hazard

The situation where one party is more likely to take risks because another party bears the consequences.

Moral Hazard

A situation where one party is more likely to take risks because they do not bear the full consequences of their actions, often observed in insurance and financial sectors.

Risky Drivers

Individuals who engage in behaviors while driving that increase the probability of accidents, such as speeding, driving under the influence, or distracted driving.

Buying Insurance

The act of entering into an agreement with an insurer to receive financial protection or reimbursement against specified future losses.