The Existence of the Principal-Agent Problem

question 97

Multiple Choice

The existence of the principal-agent problem

• A)increases the risk of buying stock in a corporation.
• B)increases the risk of becoming the sole proprietor of a business.
• C)implies that managers that have the same incentives as the board of directors.
• D)does all of the above.

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Definitions:

Sales Dollars

The total revenue generated from goods or services sold, measured in monetary units.

Personal Traits

Characteristics or qualities that define an individual’s behavior, attitude, and personality.

Optimistic

Exhibiting a positive and hopeful outlook towards future outcomes, expecting the best possible results in any scenario.

Straight Rebuys

Routine purchases of the same products without seeking new information or considering other suppliers.