Which of the Following Statements Is Not Consistent with Agency

question 29

Multiple Choice

Which of the following statements is not consistent with agency theory:

• A) Entities employ managers to conduct business on their behalf and to negotiate contracts with other parties.
• B) Managers are more likely to favour the interests of debtholders than those of shareholders in managing debt contracts.
• C) Managers will not always act in the best interest of shareholders.
• D) There are costs incurred in order to control agent's behaviour.

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Definitions:

Inflation Rate

The velocity at which the broad price level of goods and services climbs, reducing purchasing capability.

Aggregate Demand

The total demand for all goods and services within a particular economy at a given overall price level and in a given period.

Aggregate Supply

The total output of goods and services that producers in an economy are willing and able to supply at a given overall price level in a specified time period.

Price Levels

The midpoint of prices for every type of good and service produced economically.