Which of the Following Statements Is True in the Context

question 35

Multiple Choice

Which of the following statements is true in the context of principal-agent relationships?

• A) The agency relationship is confined to the top management and does not continue down the hierarchy within the company.
• B) Agents almost always have more information about the resources they are managing than the principal does.
• C) Information asymmetry can make it easier for principals to measure how well an agent is performing.
• D) In a principal-agent relationship, the decision making power rests entirely with the principals.
• E) The relationship between the company and the suppliers is an example of a principal-agent relationship.

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Definitions:

Depression

A psychiatric condition marked by a constant state of low mood or a lack of enjoyment in activities, which considerably disrupts daily functioning.

Anxiety

A feeling of worry, nervousness, or unease about something with an uncertain outcome.

Reliability

The degree to which the result of a measurement, calculation, or specification can be depended on to be accurate.

Construct Validity

Evidence that a test measures a specific concept or trait. Construct validity includes an analysis of a test through one or more of the following methods: experimental design, factor analysis, convergence with other instruments, and/or discrimination with other measures.