Monitoring is one means by which creditors can control a borrower’s in

Monitoring is one means by which creditors can control a borrower’s incentive to expropriate wealth from the creditors.

However, direct monitoring of a borrower’s actions is more difficult in a public bond issue than in a private bond issue because of the:
a. free-rider problem.
b. requirement of registration with the SEC for a public bond issue.
c. moral hazard problem.
d. adverse selection problem.

ANSWER

A