An Agency Problem Can Be Alleviated By

question 20

Multiple Choice

An agency problem can be alleviated by:

• A)requiring all firms to be sole proprietorships.
• B)compensating managers in such a way that acting in the best interest of shareholders is also in the best interest of managers.
• C)asking managers to take on more risk than they are comfortable taking.
• D)A and B.

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Definitions:

Amino Acids

Organic compounds that combine to form proteins and are used by organisms for growth, repair, and maintenance of body tissues.

Ammonia

Nitrogen-containing compound (NH3) that is a toxic product of amino acid breakdown; a large amount of water is required to excrete it.

Electron Transport Chain

A series of complexes that transfer electrons from electron donors to electron acceptors via redox reactions, coupled with the transfer of protons across a membrane to generate ATP.

Mitochondrial Matrix

The innermost compartment of mitochondria, containing enzymes, mitochondrial DNA, and ribosomes, crucial for energy production.