Which One of the Following Statements Is TRUE

question 50

Multiple Choice

Which one of the following statements is TRUE?

• A) When lenders protect themselves from the risk of asset switching, the firm's WACC can increase.
• B) An example of an agency cost is when the board of directors pays a dividend to shareholders.
• C) An example of an agency cost is when an attorney hires an expert witness for a trial.
• D) An example of asset switching is an option to exchange one piece of real estate for another.
• E) Lenders can't legally prevent a firm from engaging in asset switching.

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Definitions:

Prompt Shipment

The swift dispatch of goods to the buyer immediately after the confirmation of an order.

Ambiguous Offer

An offer in a contract that is unclear and can be reasonably interpreted in more than one way.

UCC

The Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States, including sales, leases, negotiable instruments, and secured transactions.

CISG

The United Nations Convention on Contracts for the International Sale of Goods, governing the sale of goods between parties from different countries.