In which case is the moral hazard present?
A
A Bank manager with moderate occasional consumption of alcohol
B
A race goer with betting habits and usually a heavy consumer of alcohol
C
A university professor asking for a large cover on his life
D
Where in a proposal the nominee is a near dependant of the proposer
Correct Answer: A race goer with betting habits and usually a heavy consumer of alcohol
A race goer with betting habits and usually a heavy consumer of alcohol is the moral hazard present. Moral hazard is the risk that a party has not entered into a contract in good faith or has provided misleading information about its assets, liabilities, or credit capacity.