Solutions to the moral hazard in equity contracts include all of the following EXCEPT
A)government regulations to increase information.
B)the use of financial intermediaries.
C)the use of debt contracts.
D)government ownership of resources.

Question

Quizplus · Accepted Answer

Government ownership of resources is not a solution to the moral hazard in equity contracts. Instead, it would create a different set of issues related to government control and decision-making. The other choices, including government regulations to increase information, the use of financial intermediaries, and the use of debt contracts, can help mitigate the moral hazard problem by aligning incentives and increasing transparency.

Solutions to the Moral Hazard in Equity Contracts Include All