A ________ Is When One Party in a Financial Contract

question 38

Multiple Choice

A ________ is when one party in a financial contract has incentives to act in its own interest rather than in the interests of the other party.

• A) moral hazard
• B) risk
• C) conflict of interest
• D) financial panic

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Definitions:

Corporate Form

A legal structure for organizing a business as a separate legal entity, distinct from its owners, with its own rights and liabilities.

Advantages

The positive aspects or benefits associated with a decision, strategy, or action.

Franchise

A business model where a franchisee obtains the rights to operate a business under the franchisor's brand and system in exchange for a fee.

Foreign Firm

A company that is based in one country but operates or has offices in other countries.