Which One of the Following Actions by a Financial Manager

question 29

Multiple Choice

Which one of the following actions by a financial manager creates an agency problem?

• A)refusing to borrow money when doing so will create losses for the firm
• B)refusing to lower selling prices if doing so will reduce the net profits
• C)agreeing to expand the company at the expense of stockholders' value
• D)agreeing to pay bonuses based on the book value of the company stock
• E)increasing current costs in order to increase the market value of the stockholders' equity

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