When Managers' Compensation Plans Are Tied in a Meaningful Manner

question 45

Multiple Choice

When managers' compensation plans are tied in a meaningful manner to the profits of the firm, agency problems:

• A) can be reduced.
• B) will be created.
• C) are shifted to other stakeholders.
• D)are eliminated entirely from the firm.

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Definitions:

Standard Deduction

A fixed amount that reduces the income subject to tax, available to taxpayers who do not itemize deductions.

Dependent

A person who relies on another, usually a family member, for financial support and qualifies for certain tax benefits.

Part-Time Job

Employment with fewer hours per week than a full-time job, often offering less benefits and lower wage compared to full-time positions.

Married Filing Jointly

A filing status for married couples that have chosen to combine their income and deductions on a single tax return.