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Moral hazard is not eliminated in debt financing because: A) borrowers have an incentive to assume greater risk than is in the interest of

Moral hazard is not eliminated in debt financing because: A) borrowers have an incentive to assume greater risk than is in the interest of the lender. B) firms with a great deal of debt often go bankrupt. C) principal-agent problems are greater with debt financing than with equity financing. D) the use of restrictive covenants tends to increase moral hazard.

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