Question
There are two major types of agency problems in corporate finance: Type 1 agency problem : Free Cash Flow Diversion/Squandering. Conflict of interest between managers
There are two major types of agency problems in corporate finance:
Type 1 agency problem: Free Cash Flow Diversion/Squandering. Conflict of interest between managers and shareholders.
Type 2 agency problem: Debt Overhang/Under-investment. Conflict of interest between bondholders and shareholders.
1. If a company increases its leverage, then type 1 agency problems will:
a)Increase b)Decrease c)Not change
2. If a company decreases its leverage, then type 2 agency problems will:
a)Increase b)Decrease c)Not change
3. Due to a decrease in dividend per share, type 1 agency problems will:
a)Increase b)Decrease c)Not change
4. Due to a decrease in dividend per share, type 2 agency problems will:
a)Increase b)Decrease c)Not change
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The Many Faces Of Crisis An Analysis Of Crisis Management From An Economic And Political Perspective
Authors: Marek A. Cichocki , Tomasz Grzegorz Grosse
1st Edition
3631791259, 3631791992, 9783631791998
