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:

Professional Standards

Benchmarks or criteria within a profession that define the quality, ethics, and performance expectations for professionals and their practices.

Product Mix

The variety of different products that a company makes or sells, aiming to maximize profit or market share.

Operations Managers

People in charge of managing, creating, and guiding the workflow and restructuring business activities in the manufacturing of products or services.

Product Opportunities

Potential avenues through which new or improved products can meet market needs, leading to growth and competitive advantage for a company.