The residual and the model error are equivalent concepts

Jim is the daytime supervisor for an automobile assembly line. He supervises 45 workers who perform routine jobs that require minimal training. Which of the following statements would indicate that Jim is following the transactional model of leadership?

a. Jim sets goals, monitors progress toward goal achievement, and rewards and punishes people for their level of goal accomplishment. b. Jim's leadership skills are most effective when applied to match the characteristics of the situation at hand. c. Jim has a certain idea about how he should behave as a leader and what he should do for his team of workers. d. Jim wants to develop a partnership with his team illustrated by reciprocal influence, mutual trust, respect and liking, and a sense of common fates. e. Jim likes to provide the guidance and support needed by employees and ties meaningful rewards to completion of objectives.

Because of the moral hazard problem,

A) lenders will write debt contracts that restrict certain activities of borrowers. B) lenders will more readily lend to borrowers with high net worth. C) debt contracts are used less frequently to raise capital than equity contracts. D) all of the above. E) only A and B of the above.