In Agency Theory, Risk Is the _____

question 15

Multiple Choice

In agency theory, risk is the _____.

• A)influence of uncontrollable factors on a manager's performance
• B)probability that a desired outcome may not be achieved
• C)relationship between cost and perceived benefit
• D)possibility that performance will be measured incorrectly

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Definitions:

Activity Level

A measure of the volume of production or operations, often used as a basis for allocating costs or setting prices.

Direct Materials

Raw materials that are directly traceable and integral to the finished product.

Flexible Budget

Flexible budget is an adjustable budget that changes or scales according to the actual level of activity or volume achieved, providing more accurate budgeting than static budgets.

Activity Level

refers to the volume of production or operations an entity achieves in a specific period, often impacting costs and resource allocation.