The so-called moral-hazard problem in financial management refers to the fact that managers will tend to take on more risk if they know that they are somehow insured against some or all of their losses.

Question

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The moral-hazard problem occurs when individuals or entities take on more risk because they do not bear the full consequences of that risk, often due to some form of insurance or protection.

The So-Called Moral-Hazard Problem in Financial Management Refers to the Fact