5. Agency theory deals with the issue of A. when to hire an agent to represent the firm in negotiations. B. the legal liabilities of a firm if an employee, acting as the firm's agent, injures someone. C. the limitations placed on an employee acting as the firm's agent to obligate or bind the firm. D. the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers.

16. The firm's price-earnings (P/E) ratio is influenced by its A. capital structure. B. earnings volatility. C. sales, profit margins, and earnings. D. all of these.

20. The major limitation of financial statements is A. in their complexity. B. in their lack of comparability. C. in their use of historical cost accounting. D. in their lack of detail.

21. Ratio analysis can be useful for A. historical trend analysis within a firm. B. comparison of ratios within a single industry. C. measuring the effects of financing. D. All of these are true.