Which of the Following Makes Outcome-Oriented Contracts Less Likely to Occur

question 40

Multiple Choice

Which of the following makes outcome-oriented contracts less likely to occur?

• A)Risk aversion among agents
• B)High outcome uncertainty
• C)More programmable jobs
• D)Less measurability of outcomes
• E)Low risk premium in compensations

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Definitions:

Efficient Markets Hypothesis

The theory that asset prices reflect all publicly available information about the value of an asset.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Speculative Bubble

A situation in financial markets where the price of an asset rises significantly higher than its intrinsic value, driven by exuberant market behavior.

Fundamental Value

refers to the intrinsic worth of a company, stock, or asset based on underlying financial and economic factors.