Which One of the Following Actions by a Financial Manager

question 58

Multiple Choice

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

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

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Definitions:

Perceptions

The process by which individuals interpret and make sense of sensory information to form an understanding of their environment.

Behaviors

Actions or reactions of an individual or a group in response to external or internal stimuli.

Repetition

The act or process of doing or saying something again, often for emphasis or to ensure understanding.

Perceptual Process

The sequence of steps that involves receiving, selecting, organizing, interpreting, and responding to sensory information.