It seems intuitive that the management of a company would have the same goals and objectives as the shareholders of the company. However, that is not always the case and agency problems often exist in corporations. Describe the types of agency problems that companies are often faced with and the types of measures that can be taken to mitigate such problems.

Suppose a firm uses its company cost of capital to evaluate all projects.Will it underestimate or overestimate the value of high-risk projects?

Investors demand higher expected rates of return on stocks with more variable rates of return.Explain.