The Separation of Ownership and Control Is the Most Effective

question 85

True/False

The separation of ownership and control is the most effective means used by firms to prevent managerial opportunism.

---

Definitions:

Nominal Return

The amount of profit or loss realized from an investment without adjusting for factors like inflation.

Expected Inflation

The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, as anticipated by consumers, investors, and economists.

Real Return

The rate of return on an investment after adjusting for inflation.

Nominal Rate

Typically refers to the interest rate agreed upon in the financing agreement before any adjustment for inflation.