In the Context of Agency Theory, Which of the Following

question 25

Multiple Choice

In the context of agency theory, which of the following is a difference between agents and principals?

• A) Agents are the owners of a business, whereas principals are the managers of a business.
• B) Agents take risks when they make decisions, whereas principals do not take risks.
• C) Agents are less likely than principals to focus on a short time horizon.
• D) Agents often have more information about the day-to-day business than do principals.

Understand the role of express, implied, and apparent authority in agency relationships.

Learn about special rules related to electronic agents and their actions.

Acknowledge the importance of notification in changing or ending an agent’s authority.

Grasp the liability principles under the doctrine of respondeat superior for principals.

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Definitions:

Critical Value

The threshold or point on the test distribution that is compared with the test statistic to determine whether to reject the null hypothesis.

T Value

A statistic used in hypothesis testing to determine if there is a significant difference between two groups.

Test Statistic

A value calculated from sample data that is used in a hypothesis test to determine whether to reject the null hypothesis.

Degrees Of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution or calculation.