Although Restrictive Covenants Can Potentially Reduce Moral Hazard,a Problem with Restrictive

question 112

Multiple Choice

Although restrictive covenants can potentially reduce moral hazard,a problem with restrictive covenants is that

• A) borrowers may find loopholes that make the covenants ineffective.
• B) they are costly to monitor and enforce.
• C) too many resources may be devoted to monitoring and enforcing them, as debtholders duplicate others' monitoring and enforcement efforts.
• D) all of the above.
• E) only A and B of the above.

---

Definitions:

American Psychological Association

A leading scientific and professional organization representing psychology in the United States, dedicated to advancing the creation, communication, and application of psychological knowledge to benefit society.

Margaret Floy Washburn

The first woman to earn a Ph.D. in psychology (1894) and known for her work in animal behavior and motor theory development.

Mary Whiton Calkins

An American psychologist and philosopher, the first woman to become president of the American Psychological Association.

Functionalism

A school of psychology that focuses on how mental and behavioral processes enable an organism to adapt, survive, and thrive.