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:

Design For Disassembly

A design process focused on making products easier to take apart at the end of their life cycle, facilitating recycling and reducing waste.

Small-batch Production

A manufacturing process characterized by the production of small quantities of goods, tailored to specific orders or niche markets.

Long-linked Technology

A production process characterized by linear and sequential operations, often found in manufacturing contexts.

Automobile Industry

A global sector that involves the manufacturing, design, marketing, and selling of motor vehicles.