Step in initial public offering in which hired agents act on behalf of owners is classified as______________?
Correct answer: B. Agency problems
- A. Hiring problems
- B. Agency problems
- C. Corporation internal problems
- D. Corporation external problems
Explanation
When hired agents act for the owners in an IPO or corporation, their interests may differ from those of the owners, creating an agency problem. This is a conflict arising from the separation of ownership and control, not simply an internal or external corporate problem.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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