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When a corporation decides to include its own corporate stock as part of the compensation for...

When a corporation decides to include its own corporate stock as part of the compensation for its employees and is trying to solve the

a) adverse selection problem

b) moral hazard problem

c) lemons problem

d) signaling problem

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Answer #2

Answer) The principle agent problem arises when one party (agent) agrees to work in favor of another party (principle) in return for some incentives. Such an agreement may incur huge costs for the agent, thereby leading to the problems of moral hazard and conflict of interest.

So, When a corporation decides to include its own corporate stock as part of the compensation for its employees and is trying to solve the Moral Hazard problem.

So, option b) is correct.

NOTE- PLEASE HIT LIKE AND COMMENT FOR FURTHER CLARIFICATIONS. IT'S URGENT.

answered by: anonymous
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