Which One of the Following Actions by a Financial Manager

question 45

Multiple Choice

Which one of the following actions by a financial manager is most apt to create 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) Refusing to expand the company if doing so will lower the value of the equity
• D) Agreeing to pay bonuses based on the market value of the company's stock rather than on its level of sales
• E) Increasing current profits when doing so lowers the value of the company's equity

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Definitions:

Force Field Analysis

A method used in change management to identify and evaluate the forces for and against a change, facilitating decision-making and strategy development.

Plan for the Change

A strategy or set of steps designed to successfully implement new policies, practices, or systems.

Logical Incrementalism Model

is a strategic management approach suggesting that strategies should evolve gradually through a series of small, achievable steps, rather than through drastic, major changes.

Forces Inside

The internal drivers or motivations that influence an individual's actions or decisions.