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D all of the above 46 37 consider a setting where an

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Unformatted text preview: . discourage risk averse agents from buying insurance. B. create incentives for insured agents to take precautionary action. C. raise the price of insurance in a way that is opaque to insurance buyers (like hidden fees and charges). D. All of the above. 46 37. Consider a setting where an investor hires a manager to manage her portfolio. The relationship between them is a principal-agent relationship where A. the manager is the principal. B. the investor is the principal. C. the investor is the agent. D. None of the above. 38. The optimal contract between a principal and an agent A. exposes the agent to some risk. B. shelters the agent from all risk. C. is based exclusively on effort. D. pays the agent only a fixed fee, regardless of actual performance. 47 Answer Key 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. A B B A A B C A C B B A B B D D B B B B C A C B B A D A B B B B B A C B B A 48 Ec...
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This document was uploaded on 03/03/2014.

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