Because Information Is Scarce

question 81

Multiple Choice

Because information is scarce,

• A) equity contracts are used much more frequently to raise capital than are debt contracts.
• B) monitoring managers gives rise to costly state verification.
• C) government regulations, such as standard accounting principles, can help reduce moral hazard.
• D) all of the above are true.
• E) only B and C of the above are true.

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Definitions:

Induction

The process of formally introducing a new employee to their role, the company culture, and their colleagues.

Generalization

A broad statement or conclusion derived from specific instances or examples, applying to a wider range of situations.

Specific Conclusion

A definitive end or resolution that directly addresses the particular issue or question at hand.

Circular Reasoning

A logical fallacy where the conclusion is supported by premises that assume the conclusion's truth, creating a circle in reasoning.