In the Principal-Agent Framework

question 35

Multiple Choice

In the principal-agent framework:

• A)shareholders are the principals.
• B)managers are the principals.
• C)managers are the agents.
• D)A and C.

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Definitions:

Registration Statement

A set of documents filed with a regulatory authority for the purpose of registering a new security for sale to the public.

Prospectus

A formal document that companies and investment funds issue to potential investors, detailing important facts about the investment offering.

CFO

The Chief Financial Officer, a senior executive responsible for managing the financial actions of a company.

Bonds

Fixed-income investments representing a loan made by an investor to a borrower, typically corporate or governmental.