Which of the Following Statements Is Correct

question 22

Multiple Choice

Which of the following statements is correct?

• A) Given the multi-owner nature of most large corporations,agency costs associated with perquisite consumption are not really a problem.
• B) Managers may operate in the stockholders' best interests,but they may also operate in their own personal best interests.As long as managers stay within the law,there simply are not any effective controls that stockholders can implement to control managerial decision making.
• C) Shareholder agency costs include the opportunity costs associated with constraining managerial freedom but do not include managerial salaries.
• D) An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-making authority from that person.
• E) All of the above statements are false.

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Definitions:

Store of Value

An asset that can be saved, retrieved, and exchanged at a later time without significant loss of value.

Money

A medium of exchange, a unit of account, and a store of value, used to facilitate transactions.

Wealth

An abundance of valuable resources or valuable material possessions, often measured in terms of assets like money, real estate, and personal property.

Bank Holding Company

A corporation that owns banks.