Which of the following is an example of a moral hazard?
A) A CEO is awarded $100,000 worth of executive stock options, which he exercises two years later for $1,000,000.
B) A company borrows $1,000,000 for investment in equipment, but uses the money instead to repurchase stock.
C) A company declares bankruptcy, but instead of being liquidated, it is reorganized and one set of bondholders who are owed $10 million accept $3 million in payment for the debt.
D) A CEO orders the headquarters moved just so he can have a nicer office.
E) A group of institutional stockholders votes to oust management.

Question

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The Answer of Which of the following is an example of a moral hazard?
A) A CEO is awarded $100,000 worth of executive stock options, which he exercises two years later for $1,000,000.
B) A company borrows $1,000,000 for investment in equipment, but uses the money instead to repurchase stock.
C) A company declares bankruptcy, but instead of being liquidated, it is reorganized and one set of bondholders who are owed $10 million accept $3 million in payment for the debt.
D) A CEO orders the headquarters moved just so he can have a nicer office.
E) A group of institutional stockholders votes to oust management.

Which of the Following Is an Example of a Moral