Which One of the Following Actions by a Financial Manager

question 16

Multiple Choice

Which one of the following actions by a financial manager is most apt to create an agency problem?

• A)refusing to borrow money when doing so will create losses for the firm
• B)refusing to lower selling prices if doing so will reduce the net profits
• C)refusing to expand the company if doing so will lower the value of the equity
• D)agreeing to pay bonuses based on the market value of the company stock rather than on the firm's level of sales
• E)increasing current profits when doing so lowers the value of the firm's equity

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Definitions:

Birmingham Movement

A significant campaign during the Civil Rights Movement in the 1960s in Birmingham, Alabama, aiming to end racial segregation and discrimination.

Economic Power Structure

The organization and control of economic resources and wealth within a society, often influencing political and societal norms.

Boycotts

Acts of protest in which individuals refuse to engage in buying, using, or participating in services or activities as a means of expressing dissent or forcing change.

Martin Luther King, Jr.

A prominent leader in the American civil rights movement, known for his advocacy for nonviolent protest and racial equality.