A Type of Agency Problem That Results in Shareholders Gaining

question 109

Multiple Choice

A type of agency problem that results in shareholders gaining from decisions that increase the risk of the firm sufficiently,even if they have negative NPV is:

• A)asset substitution.
• B)debt overhang.
• C)underinvestment.
• D)cashing out.

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Definitions:

Unbundling

Coding the individual parts of a specific diagnosis or procedure rather than one combination or bundle that includes all of those components.

Fraud

The intentional deception or misrepresentation that an individual or entity makes to gain a benefit to which they are not entitled.

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