The Management of XYZ Corporation Is Considering Acquiring Another Firm

question 70

Multiple Choice

The management of XYZ Corporation is considering acquiring another firm in an effort to expand the company. Stockholders of XYZ feel that the company is big enough and does not need to expand. This is an example of:

• A) the principal-agent problem.
• B) the principal problem.
• C) asymmetric information.
• D) skin-in-the-game.

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Definitions:

Ethical Considerations

Aspects of decision-making that involve evaluating the moral principles of right and wrong, often guiding conduct in professional and personal settings.

Decision-making Process

The steps involved in choosing among alternatives to reach a conclusion or resolve an issue.

International Business

Commercial transactions that occur across national borders, including trade, investments, and partnerships.

Bilateral Trade Agreements

Trade agreements between two countries that aim to reduce tariffs and quotas to encourage trade and economic cooperation.