The Principal-Agent Problem Arises Primarily Because

question 41

Multiple Choice

The principal-agent problem arises primarily because

• A) principals and agents share a common interest, leading to free-rider problems.
• B) principals and agents are in an adversarial role, sharing no common interests.
• C) principals pursue some of their own objectives, which may conflict with the objectives of the agents.
• D) agents pursue some of their own objectives, which may conflict with the objectives of the principals.

---

Definitions:

Personal Property

Any property that is not real estate; movable assets including vehicles, furniture, and personal belongings.

Office Building

A structure designed primarily for housing offices and workspace for various businesses and organizations.

Real Property

Real property refers to land, as well as anything permanently attached to the land, like buildings and houses.

Stock

Stock represents ownership in a corporation, entitling the holder to a share of the company's profits and assets.