The Principal-Agent Problem Would Not Occur If ________ of a Firm

question 18

Multiple Choice

The principal-agent problem would not occur if ________ of a firm had complete information about actions of the ________.

• A)owners;customers
• B)owners;managers
• C)managers;customers
• D)managers;owners

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Definitions:

Capital Structure

The mixture of debt and equity financing a company uses to fund its operations and grow its business.

Firm's

Pertaining to a business or company, often used to describe activities, assets, or attributes specific to that entity.

Shareholders' Equity

The residual interest in the assets of a company after deducting all its liabilities, often referred to as stockholders’ equity.

Common Stock

Common stock represents ownership shares in a company, giving holders voting rights and a claim on dividends.