In Relation to Agency Theory the Statement That Is Not

question 21

Multiple Choice

In relation to agency theory the statement that is not correct is:

• A) The self-interest of various parties is often in conflict
• B) It assumes that managers act opportunistically all of the time
• C) It assumes that individuals act primarily to advance their own self-interest
• D) None of the statements is incorrect, i.e., all are correct statements

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Definitions:

Present Value

The contemporary value of a forthcoming amount of money or cash flow stream, determined by a certain rate of return.

Discount Rate

The rate at which regional Federal Reserve Banks lend to commercial banks and other financial institutions, charged for loans obtained from the Federal Reserve's lending facility.

Present Values

The current worth of a future sum of money or stream of cash flows given a specified rate of return, taking into account the time value of money.

Future Value

The worth of a short-term asset at a certain future date, estimated based on a predicted rate of increase.