Incentive Problems Can Be Overcome, Then It Is in the Interest

question 39

Multiple Choice

Incentive problems can be overcome, then it is in the interest of all parties to develop efficient solutions to agency problems. Through ______ , there will be more wealth to be shared among contracting parties.

• A) adverse selection
• B) value maximization
• C) contracting until marginal benefit (MB) equals zero
• D) asymmetric information

---

Definitions:

Assets

Resources owned by a business or individual that have economic value.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing accounting and financial reporting standards in the United States.

IASB

The International Accounting Standards Board, an organization that establishes accounting standards known as International Financial Reporting Standards (IFRS) that guide the preparation and reporting of financial statements globally.

Financial Information

Data about a company's past, present, and future financial health and performance.