Question 1 Which of the following statements is correct regarding corporate governance? 1. Adverse selection is a situation where the principal and the agent have conflicting preferences and the agent's behaviour cannot be perfectly observed. Agency problem happens when management takes self-interested actions that are not in the interest of shareholders. III. Independent audit committee, executive directors, dual role of CEO-chairman, and equity- based compensation are examples of good corporate governance practice. II. A. B. C. I only Il only Il and Ill only I, II and III None of the choice combinations given in A., B., C., and D. are correct. E