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Select the true statement about the concept of agency cost. An agency cost is one that is incurred when an agent's actions deviate from the

Select the true statement about the concept of agency cost.

  • An agency cost is one that is incurred when an agent's actions deviate from the principal's interests.

  • An agency cost is a variable cost to an organization that has yet to be approved by the principal.

  • An agency cost is a cost to an organization that is inversely related to the organization's assumption of risk.

  • An agency cost is one that is incurred when bondholders raise the interest rate on a bond.

How are assets typically organized on a balance sheet?

  • In order of value, with most valuable assets first.

  • In order of liquidity, with more liquid assets first.

  • In order of value, with least valuable assets first.

  • In order of liquidity, with least liquid assets first.

Over the last six years, prices and investing activity in the bond market rose for two years and then fell consistently for the next four years. How is this market classified?

  • Primary bear market

  • Secular bull market

  • Primary bull market

  • Secular bear market

Which of the following is an advantage of bonds for a potential investor?

  • Companies can choose to pay off bonds early.

  • All bonds have the same interest rate, so they are predictable.

  • They typically generate higher returns than stocks.

  • The diversity of bond types means they respond easily to market needs.

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