BUISENESS MANAGEMENT
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A(n) would be an example of a principal, while a(n) would be an example of an agent.
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shareholder; manager
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manager; owner
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accountant; bondholder
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shareholder; bondholder
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Explanation:
Detailed explanation-1: -An shareholder would be an example of a principal while an manager would be an example of an agent.
Detailed explanation-2: -Corporate Finance 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-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.