Which of the Following Is a Conclusion of Agency Theory

question 13

Multiple Choice

Which of the following is a conclusion of agency theory?

• A) Managers may accept excessive financial risks to increase the returns to shareholders.
• B) Managers tend to avoid high-risk, high-return investments that may jeopardize their positions if successful.
• C) Managers will always use the least expensive source of funds to finance investments.
• D) Managers will tend to put the stockholders interests before their own security and ambitions.

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Definitions:

Written Notice

A formal, documented communication providing information or detailing conditions related to an agreement or legal obligation.

Commissions

Earnings based on sales or transactions completed, typically a percentage of the sale price.

Sales Volume

The quantity of goods or services sold within a specific period, often used to measure a business's activity level or performance.

Hourly Wages

Compensation paid to employees based on the number of hours worked, typically expressed as an amount of money per hour.