asked 101k views
5 votes
Traders working for banks are subject to the O a. exchange-risk problem O b. principal-agent problem O c. double-jeopardy problem O d. free-rider problem

asked
User Can Rau
by
7.9k points

1 Answer

4 votes

B. principal-agent problem.

Traders working for banks are subject to the principal-agent problem, which refers to the conflict of interest that arises when one person or group (the principal) hires another person or group (the agent) to act on their behalf. In this case, the bank is the principal and the trader is the agent. The principal-agent problem arises when the agent has incentives that are misaligned with those of the principal, leading to potentially harmful behavior by the agent.

answered
User Caleb Doucet
by
8.5k points
Welcome to Qamnty — a place to ask, share, and grow together. Join our community and get real answers from real people.