Indicate whether the following statements are TRUE or FALSE and explain your answer fully, but succinctly. Without an adequate explanation, you will get no credit.

a) In an agency relationship, it is often the case that there are things about what has occurred that the agent knows, but the principal does not. This information advantage is beneficial to the agent.

b) Agency costs consist of contracting costs, monitoring costs, bonding costs, and the residual loss.

c) A signal must have a cost that is related to the information that is being communicated.