Which One of the Following Statements Is TRUE

question 6

Multiple Choice

Which one of the following statements is TRUE?

• A) An agency cost is the reduction in firm value due to agency conflicts.
• B) An agency cost is the wage required to pay someone who is hired to perform a service.
• C) An example of an agency cost is when the board of directors pays a dividend to shareholders.
• D) An example of an agency cost is when an attorney hires an expert witness for a trial.
• E) The commission required by the Federal Housing Agency for a small business loan is an example of an agency cost.

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Definitions:

Analyzing

The process of examining components or data critically to understand their nature, function, or meaning, often by breaking them down into simpler parts or identifying patterns.

Sapir-Whorf Hypothesis

The theory that the structure of a language affects its speakers' world view or cognition, and thus people's perceptions are relative to their spoken language.

Hypothesis

A tentative explanation of the relationships among certain phenomena.

Sound Pitch

The auditory perception of the frequency of a sound wave, which determines the highness or lowness of a tone.