Which of the Following Best Explains 'Moral Hazard

question 14

Multiple Choice

Which of the following best explains 'moral hazard'? 

• A) Risks not subject to systematic assessment. 
• B) Risks that both contractual parties will primarily pursue their own interest. 
• C) Risk that one party will pursue their own interest. 
• D) Risk of a breach of legislation.

---

Definitions:

Inventory Shrinkage

The decrease in product inventory from the time of acquisition from a supplier to the moment it's sold to a customer, frequently as a result of theft, damage, or mistakes.

Credit Memo

A document issued to a buyer, crediting them for part of a sale due to a return or overcharge.

Sales Invoice

A document issued by a seller to a buyer, detailing a transaction's products, quantities, and agreed prices for products or services the seller has provided.

Bank Credit Cards

Financial tools issued by banks that allow users to borrow funds for purchases or cash advances, subject to repayment terms and credit limits.