Which One of the Following Statements Is TRUE

question 11

Multiple Choice

Which one of the following statements is TRUE?

• A) Asset switching occurs when a company borrows money for a safe investment but uses it for a
• Risky investment.
• 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) The commission required by the Federal Housing Agency for a small business loan is an example of
• An agency cost.
• E) An example of an agency cost is the salary of the agent hired to work for the principal.

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Definitions:

Understocks

This term describes a situation where the inventory levels are lower than the demand, potentially leading to lost sales and customer dissatisfaction.

Produce Efficiently

The process of producing goods or services in a way that minimizes costs and waste while maximizing output and quality.

Unregulated Monopoly

A market structure where a single supplier dominates without any government intervention or regulatory constraints.

Output

The quantity of products or services produced and provided by an entity, reflecting its productivity levels.