Which of the Following Would Be Best Considered to Be

question 33

Multiple Choice

Which of the following would be best considered to be a principal-agent problem in the behaviour of the following financial managers?

• A)Bill chooses to pursue a risky investment for the company's funds,because his compensation will substantially rise if it succeeds.
• B)Sue instructs her staff to skip safety inspections in one of the company's factories,knowing that it will likely fail the inspection and incur significant costs to fix.
• C)James ignores an opportunity for his company to invest in a new drug to fight Alzheimer's disease,judging the drug's chances of succeeding as low.
• D)Michael chooses to enhance his firm's reputation at some cost to its shareholders by sponsoring a team of athletes for the Special Olympics.
• E)Tara treats her staff to a free lunch at the company's expense to increase morale.

---

Definitions:

Pigment Cell Layer

A layer of cells that contain pigment, such as the melanin-containing cells found in the skin or the iris of the eye, which provide coloration and protection from UV light.

Tympanic Membrane

Also known as the eardrum, a thin membrane that vibrates in response to sound waves, transmitting sounds to the middle and inner ear.

Altitude

The height or elevation of a place above sea level, often affecting climate, oxygen availability, and physical exertion requirements.

Sensory Receptors

Specialized cells or nerve endings that respond to changes in the environment by converting energy from a specific stimulus into an electrical signal.