Which of the Following Is the Reason Behind the Principal

question 125

Multiple Choice

Which of the following is the reason behind the principal agent problem?

• A) adverse selection
• B) irrationality
• C) asymmetric information
• D) moral hazard

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Definitions:

Asset

An economic resource that can be owned or controlled to produce value and that is held to have positive economic value.

Liability

A financial obligation or debt that an entity is required to pay to another party, often arising from past transactions or events.

Revenue

The total amount of money generated by a company from its normal business operations, before any deductions are made.

Operating Cash Flows

Money generated from a company's regular business operations, indicating its ability to cover expenses and invest.