Agency Costs Are Likely to Arise When

question 14

Multiple Choice

Agency costs are likely to arise when

• A)principals and agents have different goals.
• B)owners and managers are the same.
• C)stockholders are involved in day-to-day operations of the company.
• D)the stockholders are aware of the degree to which the agents are pursuing the principal's goals.
• E)there is information symmetry between the agent and the principal.

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Definitions:

Overspend

The act of spending more money than is available or budgeted.

Hoard

A collection of items, often valuable, that is hidden or stored away by an individual or group.

Paralyzed

The loss of the ability to move (and sometimes to feel anything) in part or most of the body, typically as a result of illness, poison, or injury.

Ventilator

A machine designed to provide mechanical ventilation by moving breathable air into and out of the lungs.