Which of the Following Is an Example of Moral Hazard

question 104

Multiple Choice

Which of the following is an example of moral hazard?

• A) I hire you to work in my garden for a fixed fee, and you work hard all day.
• B) I hire you to work at an hourly rate and you work as slowly as possible.
• C) You apply for the job only because I pay a fixed wage per day, no matter how much or little you do.
• D) You agree to be paid by the weed to work in my garden, and then don't work hard.

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Definitions:

Stockholder

An individual or entity that holds one or more shares of stock in a public or private corporation, thus owning a portion of the company.

Dividends

Payments made by a corporation to its shareholder members from the company's earnings.

Chief Accounting Officer

The Chief Accounting Officer (CAO) is a senior executive responsible for managing the accounting operations of an organization.

Controller

A senior position in a business responsible for overseeing the accounting operations and financial reporting.