The Principal-Agent Problem Arises

question 20

Multiple Choice

The Principal-Agent Problem arises:

• A)because managers have little incentive to work in the interest of shareholders when this means working against their own self-interest.
• B)because of the separation of ownership and control in a corporation.
• C)Both A and B
• D)None of the above

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Definitions:

Market Values

The current price at which an asset or service can be bought or sold in an open and competitive market.

Real Property

Land and anything permanently affixed to the land, such as buildings and natural resources.

Certificate of Exchange

A document that certifies a completed exchange, often referring to the exchange of stock certificates in mergers and acquisitions.

Shares Exchange

The process or act of trading shares of stock, typically through a formal exchange, where securities are bought and sold by investors.