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Teaching Since:	Jul 2017
Last Sign in:	304 Weeks Ago, 5 Days Ago
Questions Answered:	15833
Tutorials Posted:	15827

Education

MBA,PHD, Juris Doctor
Strayer,Devery,Harvard University
Mar-1995 - Mar-2002

Experience

Manager Planning
WalMart
Mar-2001 - Feb-2009

Category > Business & Finance Posted 08 Aug 2017 My Price 5.00

Need help. Please Answer Questions 1,3,5,12,13,15,16,17,18,19.

Question 1

A bank can decrease the degree of moral hazard if it

	a.	Monitors the borrowers behaviors
	b.	Placing covenants on the loan
	c.	Both of the above
	d.	None of the above

5 points

Question 2

A difference between moral hazard and adverse selection is that

	a.	adverse selection deals with post-contractually determined public information
	b.	moral hazard deals with pre-contractually determined public information
	c.	adverse selection deals with pre-contractually determined private information
	d.	moral hazard deals with post-contractually determined private information

5 points

Question 3

A shoe salesman working on commission must decide whether to work hard or shirk. Working hard would increase the probability of a sale from 20% to 70% but the effort would cost him $5. If the typical commission on a pair of shoes was $8, would he decide to work hard?

	a.	Yes because it is higher than what it costs him in effort
	b.	Yes because it is higher than zero
	c.	No, because it costs him more in effort
	d.	None of the above

5 points

Question 4

A firm that screens candidates to determine how well they would work with limited supervision is afraid of facing

	a.	Adverse selection
	b.	Moral hazard
	c.	Forced bankruptcy
	d.	None of the above

5 points

Question 5

An auto-insurance company introduces an anti-theft device that records how well the customer has secured his car. If the driver locks his car with the monitored lock every day, the rates go down. The company is trying to solve a __________problem

	a.	Adverse selection
	b.	Moral hazard
	c.	Forced bankruptcy
	d.	None of the above

5 points

Question 6

An example of moral hazard is

	a.	people drive less safely with more airbags than without
	b.	football players avoid 'spearing' with their heads even with safer helmets
	c.	people drive as carefully in icy conditions with antilock brakes as without
	d.	people read the medicine warnings as carefully when self-medicating as with a doctor's prescription

5 points

Question 7

An example of moral hazard is

	a.	a piece-rate garment worker shirking more than a per hour worker
	b.	an author on contract going to as many book signings as one with a percentage royalty rate
	c.	an hourly salesman working harder than a commission salesman
	d.	A taxi driver paid per mile taking a longer route than necessary

5 points

Question 8

An example of moral hazard is

	a.	an hourly salesman working less hard than a commission salesman
	b.	a piece-rate garment worker shirking more than a per hour worker
	c.	A taxi driver paid per mile taking the shortest route
	d.	an author on contract going to as many book signings as one with a percentage royalty rate

5 points

Question 9

Because employer-provided health insurance was too expensive, a major employer decided to self-insure and simply pay for medical bills itself rather than a premium to an insurance company. As a result

	a.	they are less likely to institute a wellness program for emp
	b.	they are more likely to institute a wellness program for employees
	c.	they are indifferent with regards wellness programs
	d.	they will regret this decision

5 points

Question 10

Economists disagree with constant government bailouts of large, struggling companies because it can give a rise to

	a.	Moral hazard
	b.	Adverse selection
	c.	Lazy managers
	d.	None of the above

5 points

Question 11

For a mortgage lender that makes mortgage loans to borrowers, which one of the following would be an example of moral hazard?

	a.	After the loan has been made, individuals become careless with their finances
	b.	Individuals most likely to default are the ones most likely to apply for the loan
	c.	Lenders performing a credit check on all potential borrowers
	d.	None of the above

5 points

Question 12

Many spouses complain that their partners put less effort into their relationship after getting married. This is an example of

	a.	Moral hazard
	b.	Adverse selection
	c.	Terrible husbands
	d.	None of the above

5 points

Question 13

Moral hazard implies that

	a.	Insured individuals exercise less care because they have less incentive to do so
	b.	Insured individuals exercise more care because they have more incentive to do so
	c.	Insured individuals exercise less care because they have more incentive to do so
	d.	Insured individuals exercise more care because they have less incentive to do so

5 points

Question 14

Moral hazard is caused by

	a.	Hidden actions
	b.	Hidden information
	c.	Both of the above
	d.	None of the above

5 points

Question 15

Moral hazard would lead to

	a.	Drivers becoming a lot more careful after buying insurance
	b.	Only risky drivers buying insurance
	c.	Drivers taking on a lot more risk after buying insurance
	d.	More risky drivers buying more insurance

5 points

Question 16

One difference between moral hazard and adverse selection is

	a.	Adverse selection is when individuals most appropriate for positions are most likely to apply for them
	b.	Adverse selection is when you choose the wrong answer on a test
	c.	Adverse selection has to do with unobservable actions of individuals
	d.	Adverse selection has to do with unobservable characteristics of individuals

5 points

Question 17

Safe drivers buying “accident forgiveness” insurance tend to

	a.	Engage in less risky driving
	b.	Not change their driving patterns
	c.	Become even safer drivers
	d.	Engage in more risky driving

5 points

Question 18

Smart Sam can make a $200 investment that yields $1000 50% of the time and $0 50% of the time. What is his expected return on the investment?

	a.	$200
	b.	$300
	c.	$500
	d.	$400

5 points

Question 19

There is an influenza epidemic at Sally’s office. If she got the flu shot this winter, how does this affect her decision of going to work or working from home?

	a.	She would choose to go to work since the marginal benefit of working from home is too low
	b.	She would stay home since the marginal cost of going to work so is too low
	c.	She would choose to work from home since the marginal cost of going to the office is high
	d.	She would stay home-who wants to go to work

5 points

Question 20

To incentivize R&D, the government proposes to take on a company’s costs if its product does not succeed. This would lead to

	a.	The company going bankrupt
	b.	The company developing a lot more products with a high risk of failure
	c.	The company developing no high risk products
	d.	The company developing a lot more products with a low risk of failure

Attachments:

1502178143-Quiz 6 Part D1.doc

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Need help. Please Answer Questions 1,3,5,12,13,15,16,17,18,19.

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