In Which of the Following Scenarios Would You Expect Agency

question 50

Multiple Choice

In which of the following scenarios would you expect agency problems to be most prevalent?

• A)in a firm that is transparent--i.e., the expected cash flows and costs of capital can easily be calculated even by outsiders.
• B)in a small company with one owner and only a few employees
• C)in a firm that relies heavily on research and development
• D)when a firm's projects are short-term, and interim progress reports are forthcoming and deemed fairly accurate