Question $4$

Which one of the following actions by a financial manager is MOST LIKELY to create an agency problem?

a manager turning down a value$-$contributing project because of its risks.

a manager using too little debt within the firm's capital structure because of the additional risk associated with debt.

refusing to borrow money when doing so will create losses for the firm

refusing to lower selling prices if doing so will reduce the net profts

a manager expensing a lavish dinner on the company expence report.

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