The Company That Manufactures Screaming Chocolate Zonkers Breakfast Cereal Finds

question 54

Multiple Choice

The company that manufactures Screaming Chocolate Zonkers breakfast cereal finds that its sales collapse, it is forced into bankruptcy, and it defaults on its bonds, as a result of information on the filthy conditions in its factory, which had long been known to management, leaking out to the general public. This incident is best thought of as an example of

• A)symmetric information in the financial markets.
• B)asymmetric information in the financial markets.
• C)moral hazard in the financial markets.
• D)the generally poor state of sanitation in the food-processing industry in the United States.

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Definitions:

Round Off

The process of adjusting a numerical value to its nearest and most simplified form, often by eliminating decimal points or insignificant digits.

Decimal Point

A dot or small symbol used to separate the integer part from the fractional part of a number written in decimal form.

Multiplication

A fundamental mathematical operation that represents the repeated addition of a number by itself a specified number of times.

Division

In business, a division refers to a distinct part of a company that focuses on a particular market, product line, or service, often operating with a certain degree of independence.