A Type of Agency Problem That Results in Shareholders Gaining

question 39

Multiple Choice

A type of agency problem that results in shareholders gaining by choosing not to finance new,positive-NPV projects is:

• A)asset substitution.
• B)debt overhang.
• C)excessive risk-taking.
• D)distress costs.

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Definitions:

Antibodies

Proteins produced by the immune system to neutralize or destroy foreign substances such as bacteria and viruses.

African-American

Describes individuals in the United States who have sub-Saharan African ancestry.

Puerto Rican

Pertaining to the people, culture, or island of Puerto Rico, a territory of the United States.

AIDS

Acquired Immunodeficiency Syndrome, a chronic, potentially life-threatening condition caused by the human immunodeficiency virus (HIV) which damages the immune system.