Which One of the Following Actions by a Financial Manager

question 49

Multiple Choice

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

• A)Borrowing money when doing so creates value for the firm
• B)Lowering selling prices that will result in increased firm value
• C)Agreeing to expand the company at the expense of stockholders' value
• D)Agreeing to pay management bonuses based on the market value of the firm's stock
• E)Refusing to spend current cash on an unprofitable project

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