5
AssignmentMultiple Choice

Buying and Selling Stock

Question 5 • FL-2102373-Personal Finance and Money Management Honors

Sam has a comprehensive home insurance policy covering theft and often leaves his front door unlocked. What is this behavior called?

Answer
A
risk mitigation
B
claim aversion
C
moral hazard
D
liability shifting

Explanation

Moral hazard occurs when having insurance makes someone less careful because the policy covers some of the losses. Sam’s theft coverage may make him more willing to leave the door unlocked, increasing the chance of a theft. The correct choice is moral hazard.

AI-written and checked against the verified answer.

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