BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
A(n) would be an example of a principal, while a(n) would be an example of an agent.
|
|
shareholder; manager
|
|
|
manager; owner
|
|
|
accountant; bondholder
|
|
|
shareholder; bondholder
|
Explanation:
Detailed explanation-1: -The correct option is “shareholder; manager.” Shareholders and managers are engaged in a hierarchy where the shareholders as the principals attempt to control and channel the agents’ (management) actions to attain the wealth maximization objective.
Detailed explanation-2: -An shareholder would be an example of a principal while an manager would be an example of an agent.
Detailed explanation-3: - Agent: A person who agrees to act on behalf of and instead of his or her principal, subject to the principal’s control. A good example would be an insurance agent.
There is 1 question to complete.