If the risk associated with a particular outcome is ________, or the value of a particular outcome is ________, then cost-benefit analysis might lead people to take too few precautions

Suppose you have a fixed-rate mortgage with a nominal interest rate of 6% and the expected annual inflation rate over the life of the mortgage is 2%. What is the expected real interest rate?

A) 3% B) 4% C) 8% D) 12%

The principal-agent problem arises because the agent's objectives differ from those of the principal

a. True b. False