Which of the Following Would Be an Example of a Principal

question 277

Multiple Choice

Which of the following would be an example of a principal trying to deal with a moral hazard problem?

• A)The parents of an infant secretly place video cameras in their house before the baby-sitter arrives.
• B)An insurance company checks police records to determine if its policyholders have received traffic citations.
• C)An employer examines his workers' output on a daily basis.
• D)All of the above are correct.

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Definitions:

Holder in Due Course

A party possessing a negotiable instrument (like a check) in good faith and for value, with certain protections against claims and defenses.

Payable to Cash

A term indicating that a check or other document is made out to "Cash" instead of a specific payee, allowing anyone who holds it to cash it.

Voluntary Transfer

The intentional conveyance of property or rights from one party to another without coercion or force.

Unauthorized Signature

A signature made without the expressed permission of the person purported to have signed, potentially leading to legal or financial complications.