All of the Following Statements About Agency Problems Are True

question 122

Multiple Choice

All of the following statements about agency problems are true EXCEPT

• A) Agency problems interfere with the goal of maximizing shareholder value.
• B) Agency costs are paid by the managers who do not act in the shareholders' best interest.
• C) Agency problems result from the separation of management and the ownership of a firm.
• D) The root cause of agency problems is conflicts of interest.

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Definitions:

Dodd-Frank Wall Street

A comprehensive set of financial regulations passed in 2010 in response to the 2008 financial crisis, aimed at reducing risks in the U.S. financial system.

Financial Regulatory System

A framework of laws, rules, and agencies designed to maintain the integrity and stability of the financial markets and protect consumers.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, characterized by vast unemployment, deflation, and a significant decline in economic activity across much of the world.

Consumer Protection Legislation

Laws and regulations designed to ensure the rights of consumers are upheld, protecting them against unfair, deceptive, or fraudulent practices by businesses.