Financing Decisions PRIMARILY Deal With

question 209

Multiple Choice

Financing decisions PRIMARILY deal with:

• A)how to obtain funds to acquire resources.
• B)the use of scarce resources.
• C)preparing financial statements for shareholders.
• D)acquiring equipment and buildings.

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Definitions:

Moral Hazard

Moral hazard occurs when an individual or entity has a tendency to take more risks because the negative consequences of those risks will be partially or fully borne by others.

Airbags

Safety devices in vehicles designed to inflate rapidly in the event of a collision to prevent occupants from striking interior objects or being ejected from the vehicle.

Reckless Driving

Operating a vehicle in a dangerous manner that disregards the safety of others, often resulting in legal penalties.

Economically Efficient Outcome

A situation where resources are allocated in a way that maximizes the net benefit to society or minimizes wastage.