Which Statement Is Correct About "Agency Cost of Leasing

question 4

Multiple Choice

Which statement is correct about "agency cost of leasing"?

• A)Conditions can be added to the lease agreement to increase agency costs.
• B)Agency costs are nil if the lease contract covers the entire useful life of the asset.
• C)Assets that are easy to damage are better candidates for leasing.
• D)Assets that are difficult to damage have higher agency costs.

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Definitions:

Continental Rifting

The pulling apart of a continent, forming a low, fault-bounded trough (continental rift); may lead to a divergent plate boundary that leads to seafloor spreading and splitting apart a continent.

Continental Shelves

Submerged landforms at the edges of continents, extending from the coastline to a sharp drop-off into the deeper ocean floor.

Shallow Seawater

Areas of the ocean that are not deep, often found near coastlines, characterized by relatively low depths.

Sea Mounts

Undersea mountains formed by volcanic activity, rising from the ocean floor but not reaching the surface.