Which One of the Following Actions by a fiNancial Manager

question 222

Multiple Choice

Which one of the following actions by a financial manager creates an agency problem?

• A) Refusing to borrow money when doing so will create losses for the firm.
• B) Refusing to lower selling prices if doing so will reduce the net profits.
• C) Agreeing to expand the company at the expense of stockholders' value.
• D) Agreeing to pay bonuses based on the market value of the company stock.
• E) Increasing current costs in order to increase the market value of the stockholders' equity.