In Signaling Theory,when a Manager Has Better Information Than Outside

question 109

True/False

In signaling theory,when a manager has better information than outside investors about the firm,this is called asymmetric information.

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Definitions:

Overdraft

A payment by a bank on behalf of a customer for more than the customer has on deposit.

Agent

A person authorized to act on behalf of another and subject to the other’s control in dealing with third parties.

Depository Bank

A financial institution where deposits are made, held, and managed; also facilitates financial transactions for clients.

Settlement

An agreement reached between parties in a dispute, where usually one party agrees to provide compensation to the other, ending the dispute outside of court.