Which of the Following Statements Is True of Agency Problems

question 71

Multiple Choice

Which of the following statements is true of agency problems?

• A)Regardless of economic conditions, if a firm's stock price falls during the year, this indicates that the firm's managers must not be acting in the best interests of the shareholders.
• B)One method of controlling agency problems is to engage in the taking of "poison pills."
• C)One of the best means to control agency problems is to require the managers and other important decision-makers of the firm to also be owners of the firm.
• D)Agency problems probably would not exist if the important decisions of a firm were made by persons who have no vested interests, such as ownership, in the firm.
• E)Shareholders can solve agency problems by selling their stock to other investors.

Identify the causes and implications of deforestation.

Understand the controversies and benefits of different forms of alternative energy.

Comprehend the concept of sustainable development and its importance.

Recognize the importance of reducing pollution through specific legislative and organizational practices.

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Definitions:

Liability

Legal responsibility or obligation to another party, often involving compensation for harm or damages incurred.

Lancer

A term historically used to refer to a light cavalry soldier armed with a lance, but in modern contexts, it might not have a commonly recognized definition related to the provided key terms.

Modifications

Changes or alterations made to the terms of a contract, agreement, or document after it has been executed.

Personal Purposes

Activities or objectives pursued for an individual’s private benefit or enjoyment rather than for business or professional reasons.