Which One of the Following Statements Is TRUE

question 30

Multiple Choice

Which one of the following statements is TRUE?

• A) A corporate executive health club is an example of a nonpecuniary benefit.
• B) When lenders protect themselves from the risk of asset switching by raising the interest rate, the firm's WACC can decrease.
• C) A lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.
• D) A supplier substituting a lower-quality raw material without approval is an example of asset switching.
• E) An agency problem occurs when an owner/manager sells stock to an outside investor and the owner/manager fears the outside investor will consume too many perquisites.
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Definitions:

GABA

Gamma-Aminobutyric Acid, an inhibitory neurotransmitter in the central nervous system that helps regulate neuronal excitability throughout the nervous system.

Serotonin

A chemical messenger in the brain crucial for maintaining stable mood, as well as promoting feelings of contentment and joy.

Peripheral Nervous System

The part of the nervous system outside the brain and spinal cord, which connects the central nervous system to limbs and organs.

Sympathetic Nervous System

Part of the autonomic nervous system that prepares the body for physical activity by increasing heart rate, constricting blood vessels, and raising blood pressure.