Which of the Following Is Not an Example of an Agency

question 40

Multiple Choice

Which of the following is not an example of an agency problem?

• A)Firms are not as levered as shareholders would like them to be, due to fears of insolvency and possible bankruptcy.
• B)Managers have discretion over whether or not to take on risky projects.
• C)Managers can maintain control over a greater free cash flow by avoiding debt in their firm's capital structures.
• D)Investors do not have perfect information about the value of their investments.

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Definitions:

Factored Form

An expression represented as the product of its factors.

Constructed Figure

A geometric shape that is drawn or created using specific rules or tools.

Expression

A combination of symbols, numbers, and operations (such as addition and multiplication) that represents a mathematical concept.

Factor

One of two or more expressions that are multiplied together to form a product or an element that divides another number or expression without leaving a remainder.