Question 11 1.5 pts Sky Rockets Ltd is facing some financial difficulties. The managers of Sky Rockets Ltd gave up the opportunity to invest in a project because they thought it would benefit creditors more than shareholders. According to agency theory this is an example of: under-investment claim dilution residual agency loss the horizon problem Question 12 1.5 pts Which one of the following is an agency problem that may arise between shareholders and managers? risk aversion earnings management information asymmetry excessive dividend payments > Question 13 1.5 pts Beta Ltd recognised more impairment losses in periods when it had higher revenues and profit, and deferred expenses in period when it had lower profits. This is an example of: management of accruals a cosmetic accounting policy change income smoothing conservatism Question 14 1.5 pts Gratidea Ltd has an unsecured loan from British Bank and then obtains a secured loan from another bank. In accordance with agency theory this is an example of: the horizon problem claim dilution a leverage constraint risk aversion Question 15 1.5 pts The horizon problem can be mitigated (i.e., reduced) by: income smoothing share-based remuneration a leverage constraint O payming managers a higher fixed salary