Which of the Following Describes the "Collective Action Problem

question 26

Multiple Choice

Which of the following describes the "collective action problem"?

• A) When a CEO fails to represent the interest of shareholders in daily decisions of the firm.
• B) When the shareholders of a firm fail to act in their own best interests.
• C) When the managers of a firm lack incentive to maximize shareholder wealth.
• D) When an individual stockholder spends time and resources monitoring managers, bearing the cost, while the benefits go to all the shareholders in the firm.

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Definitions:

Savings Account

is a deposit bank account that earns interest, designed for individuals to save money over time.

Investment Account

A financial account that holds securities, such as stocks, bonds, or mutual funds, for investment purposes.

Providing Legal Advice

The act of giving professional legal opinions regarding the law or conduct to someone, typically an attorney advising a client.

Bookkeeping

The process of recording financial transactions and maintaining organized accounts to ensure accurate financial reporting and analysis.