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olga_2 [115]
3 years ago
8

An agency problem can occur when_____________.

Business
1 answer:
AlladinOne [14]3 years ago
7 0

Answer:

A) the desires and objectives of the owners and agents conflict.

Explanation:

An agency problem occurs when there is conflict of interest in a situation where one part is expected to act in the best interest of the other.

In finance this usually occurs between the management and stockholders, the manager is an agent for the stockholder (principal). The manager is expected to run the business and make profit for the principal and may instead maximise his own wealth.

Agency problem arises when an agent is motivated to act in his own interest and not fully for his principal.

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Evaluate this statement: "If the yield of two bonds having equal maturity changes the same amount, the price of the lower coupon
AfilCa [17]

Answer:

FALSE

Explanation:

As the lower coupon means there is less amount of cash subject to variation of interest rate.

We must understand that in the end of the life of a bond(maturity), the value should always match the face value thus, the difference in bond market price arise from coupon payment.

If a bonds coupon payment is 40 dollars while another bond coupon payment  is 80 dollars the present value of the second will be more influenced from the interest rate as there are more dollars in the future to discount.

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4 years ago
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Customer may not want the product which the company is making well.

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6 0
3 years ago
When the ace hardware store located in franklin mails an advertising flyer to all the residents in the community, it is an examp
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4 years ago
Most economists believe that in the long run, changes in the money supply Group of answer choices affect nominal but not real va
Ymorist [56]

Answer:

affect nominal but not real variables. This view that money is ultimately neutral is consistent with classical theory.

Explanation:

This idea is held by classical economists (not by most economists) since they believe in the quantitative theory of money:

MV = PQ

  • M = quantity of money
  • V = velocity of money
  • P = price level
  • Q = quantity of goods

Classical theory was abandoned 90 years ago (according to classical theory, recessions were not possible and couldn't exist, but then the Great Depression came and the impossible became true). Neo-classical or monetarists appeared in the 1960s, and lately, neo-neo-classical appeared with George W. Bush. The problem with the quantitative theory is that it needs the following things to be true in order to hold, and empirical evidence over the last 90 years showed that none of them are true:

  1. the velocity of money has to be constant (AND IT IS NOT CONSTANT)
  2. real output is independent on money supply (NOT TRUE)
  3. causation goes from money to prices (MODERN ECONOMISTS BELIEVE IT IS THE OTHER WAY)

5 0
3 years ago
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