In a contingent contract
A) the risk neutral party bears the risk.
B) monitoring is not possible.
C) the principal will be at a disadvantage.
D) the payoffs are dependent upon another variable, such as revenue or profit.
Question 2
In developed industries, the interest rate tends to be lower than in newer industries. What could explain this?
A) greater demand for loans in the developed industry
B) greater supply for loans in the new industry
C) greater demand for loans in the new industry
D) lower supply for loans in the developed industry
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