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:

Future Orientation

The extent to which individuals or cultures prioritize and value actions or decisions that pertain to future outcomes and goals.

Polychronic Time

A perception of time that values multi-tasking and flexible scheduling, common in cultures that prioritize relationships over strict adherence to schedules.

Monochronic Time

A cultural approach to time management that emphasizes doing one task at a time.

Natural

Existing in or derived from nature; not made or caused by humans.