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To Align the Interests of the Agents with the Principal's

question 77

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To align the interests of the agents with the principal's own interests,one option is to create a behavior-oriented contract that includes


Definitions:

Inflationary Expectations

Anticipations of future inflation that can influence economic behaviors in the present.

Default Risk Premium

The additional amount a borrower must pay to compensate the lender for assuming the risk that the borrower may default on the loan.

Corporate Bond

A debt security issued by a corporation to investors, typically offering interest payments and principal repayment at maturity.

Yield Curve

A graph showing the relationship between bond yields and maturities, commonly used to gauge future interest rate changes.

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