Which of the Following Types of Agency Relationships Serves as the Foundation

question 94

Multiple Choice

Which of the following types of agency relationships serves as the foundation for the other types of agency relationships?

• A) principal-agent relationship
• B) employer-employee relationship
• C) employer-independent contractor relationship
• D) dual agency

---

Definitions:

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Working Capital Investment

The funds invested in the short-term assets of a company, such as inventory and receivables, to support its daily operations.

Salvage Value

The estimated residual value of an asset at the end of its useful life, important for calculating depreciation.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows or to evaluate the attractiveness of an investment.