Which of the Following Statements Is Correct

question 39

Multiple Choice

Which of the following statements is correct?

• A)Given the multi-owner nature of most large corporations, the agency costs associated with perquisite consumption are not really a problem.
• B)Managers may operate in the stockholders' best interests, but they may also operate in their own personal best interests. As long as managers stay within the law, there simply are not any effective controls that stockholders can implement to affect managerial decision making.
• C)The potential for agency problems is greatest when individual stockholders own extremely small proportions of the companies and managers have little, if any, of their own wealth tied up in these companies.
• D)An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-making authority from that person.
• E)Managers rule out any potential conflicts of interest with the shareholders by selling the firm's stock to outsiders.

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Definitions:

Picture Plane

Refers to the surface on which a two-dimensional art piece is created, acting as the imaginary boundary between the viewer and the depicted scene.

Mnemonic Devices

Tools or techniques that aid in the memorization or retrieval of information, often by making connections between new information and information already stored in memory.

Method Of Loci

A memorization method that requires the learner to visualize an ordered series of physical locations as mnemonic cues for a list of information.

Pegword Method

A mnemonic device that involves linking words with numbers to remember a list of items in order by associating them with pre-memorized peg words.