Two Common Agency Problems Include

question 69

Multiple Choice

Two common agency problems include

• A) managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk aversion.
• B) managers not investing enough of a firm's capital in managerial perquisites and managerial risk aversion.
• C) managers investing some of a firm's capital in managerial perquisites that do not add economic value to a firm and managerial risk seeking.
• D) managers not investing enough of a firm's capital in managerial perquisites and managerial risk seeking.

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Definitions:

Total Interest

The amount of interest payable over the life of a loan or financial instrument, calculated as the sum of all interest payments.

Principal

The amount borrowed or invested.

Accrued Interest

Interest that has been incurred but not yet paid, reflecting money owed on loans or credit extended.

Dishonored Note

A dishonored note is a promissory note that has not been paid upon its maturity date.