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If an Agent Is Risk Averse and a Principal Is

Question 55

Multiple Choice

If an agent is risk averse and a principal is risk neutral, if the agent pays the principal a fixed fee


A) all risk is eliminated.
B) the risk neutral person bears all the risk while the risk averse person bears none.
C) the risk averse person bears all the risk while the risk neutral person bears none.
D) the principal and agent share risk equally.

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