The Conflict in a Principal-Agent Relationship Arises When

question 68

Multiple Choice

The conflict in a principal-agent relationship arises when

• A) the company has more outside directors than inside directors.
• B) the strategy adopted by the company's agents tries to emulate the mission statement created by the principals.
• C) stockholders and agents are involved in the day-to-day operations of the company.
• D) the goals of the principals and agents are not aligned with each other.

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Definitions:

Noncancelable

A contract or agreement that does not allow for cancellation before its set expiration or end date.

Ownership

The state or fact of possessing, controlling, or having title to an asset or property.

Mortgage Bonds

Bonds secured by a mortgage on one or more assets, providing bondholders a claim on those assets in case of default.

Good Faith

Acting with honest intention or belief without intending to deceive.