When Managers Do NOT Own Very Much of the Net

question 48

Multiple Choice

When managers do NOT own very much of the net worth of the firm,then

• A) there may be a principal-agent problem.
• B) the firm will usually have to raise most of its funds in financial markets.
• C) the firm will have to rely more on equity financing than debt financing.
• D) the firm will have to rely more on debt financing than equity financing.

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Definitions:

Strategy Map

A visual tool that illustrates a company’s strategic goals and the means to achieve them, highlighting cause-and-effect relationships.

Supply Chain Map

A graphical representation that details the steps involved in moving a product from supplier to customer, including all intermediary phases such as procurement, manufacturing, and distribution.

Internal Processes Perspective

A component of the Balanced Scorecard that emphasizes improving internal operations and processes to meet business goals and customer expectations.

Customer Returns

Goods returned to a seller by the purchaser due to defects, dissatisfaction, or other reasons.