Which One of the Following Actions by a Financial Manager

question 7

Multiple Choice

Which one of the following actions by a financial manager creates an agency problem?

• A) Refusing to borrow money when doing so will create losses for the firm
• B) Refusing to lower selling prices if doing so will reduce the net profits
• C) Agreeing to expand the company at the expense of stockholders' value
• D) Agreeing to pay bonuses based on the book value of the company stock
• E) Increasing current costs in order to increase the market value of the stockholders' equity

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