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.