Multiple Choice Questions on Moral hazard ........ for RBI Grade B Exam Preparation

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Multiple Choice Questions

Moral hazard ........

Finance (RBI) Financial Institutions
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     Moral hazard

    results from the incentive for some people to engage in a transaction that is undesirable to everyone else.

    Incorrect Answer

    results from the chance that an individual may have an incentive to act in such a way as to put that individual at a greater risk.

    Correct Answer

    is when a party to a transaction has relatively more information than another party

    Incorrect Answer

    is when the actions of a group of individuals have undesirable effects on a given individual.

    Incorrect Answer
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    Explanation:

    Moral hazard is a situation in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. It arises when both the parties have incomplete information about each other.

    By: Srishti Gupta
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