The Principal-Agent Problem Is the Problem Of

question 138

Multiple Choice

The principal-agent problem is the problem of:

• A) an agent trying to exploit an information advantage in a dishonest way.
• B) incentivizing an employee to work in the interest of the owner.
• C) one party to an exchange having more information than the other party.
• D) an offer conveying negative information about the product being offered.

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Definitions:

Shareholders

Individuals or entities that own shares of stock in a corporation, giving them an ownership interest in the company.

Ex-Dividend Date

The date on or after which a security is traded without the right to receive the next dividend payment.

Cash Dividend

A payment made by a company out of its earnings to shareholders in the form of cash.

Date of Record

The cut-off date set by a company in order to determine which shareholders are eligible to receive a dividend or distribution.