Which of the Following Most Accurately Defines What Is Meant

question 39

Multiple Choice

Which of the following most accurately defines what is meant by 'agency costs' in finance theory?

• A) The costs of allowing financial intermediaries to take decisions on your behalf which may not be optimal for you
• B) The direct and indirect costs of ensuring that agents (e.g. managers of firms) act in the best interests of principals (e.g. shareholders of firms)
• C) The initial cost of purchasing an asset through an agent, e.g. a travel agent's fee
• D) The costs of buying an asset through an agent such as a stock broker or estate agent

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Definitions:

Encouraged

Motivated or inspired to proceed, act, or feel confident in doing something.

Individualistic

Characterized by the prioritization of personal goals and autonomy over group goals and cohesion.

Personality Traits

Enduring characteristics or qualities of an individual that influence behaviors, emotions, and thoughts across various situations.

Social Phenomena

Events, behaviors, or structures that occur within the context of society, influenced by and influencing individuals and groups.