Select the true statement about the concept of agency cost.

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

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

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

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