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(b) The principal-agent problem is a conflict in priorities between a person or group and the representative authorized to act on their behalf. Explain with
(b) The principal-agent problem is a conflict in priorities between a person or group and the representative authorized to act on their behalf. Explain with an example, how does a principal-agent problem arise in a corporate world. Within the agency context, discuss how does a maximisation of long-run expected cash flows to a firm is translated into maximisation of shareholders' wealth. (25 marks)
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