The Agency Relationship in Corporate Finance Refers To

question 32

Multiple Choice

The agency relationship in corporate finance refers to:

• A)when the shareholders hire a manager to run their company.
• B)when the corporate hires an advertising agency to market their new product or service.
• C)when the board of directors are elected to staggered terms.
• D)when the board of directors oversee the CEO.

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Definitions:

Indirect Costs

Costs that are not directly attributable to a specific product or service but are necessary for the business to operate, such as utility expenses or salaried personnel.

Management Process

A systematic approach to planning, organizing, leading, and controlling a company's activities to achieve objectives.

Continuous Improvement

An ongoing effort to improve products, services, or processes by making small, incremental improvements over time.

Directing

The process by which managers, given their assigned level of responsibilities, run day-to-day operations.