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NEW QUESTION: 1

A. Option B
B. Option A
C. Option D
D. Option C
Answer: B

NEW QUESTION: 2
Which of the following statements about agency theory is TRUE?
A. Restrictive debt covenants reduce the conflict between stockholders and managers.
B. A company that pays fixed salaries with no variable compensation schemes likely has little agency conflict.
C. An agency relationship is created when the board of directors appoints a new Chief Financial Officer.
D. Encouraging managers to take on high-risk projects aligns their goals with that of bondholders.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
An agency relationship is created when decision-making authority is delegated to an agent without the agent being 100% responsible for the consequences of her decisions. Here, unless the Chief Financial Officer owns 100% of the firm, she has an agency relationship with the company.
Stockholders and managers both benefit from risky projects that increase profitability and firm value.
However, bondholders bear the risk of bankruptcy. Thus, encouraging managers to take on high-risk projects does not help to align their goals with that of creditors. A company that pays fixed salaries with no variable compensation schemes is not set up to reduce agency conflict. Without managerial compensation plans that motivate managers to act to increase stock price, stockholders and managers may have disparate goals.

NEW QUESTION: 3
Which of the following should a technician do NEXT, if the laptop's internal speakers do not work, after replacing the motherboard due to a video issue?
A. Verify that the speakers are compatible with the replacement motherboard
B. Replace the speakers
C. Update the video drivers
D. Check the speaker's connection to the motherboard
Answer: D