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What is the primary concern regarding agency costs in a leveraged firm? a) Agency costs arise when there is harmony between shareholders and managers. b)

What is the primary concern regarding agency costs in a leveraged firm?

a) Agency costs arise when there is harmony between shareholders and managers. b) Agency costs only occur when a firm is not leveraged. c) A conflict of interest exists when managerial decisions affect the value of equity differently than the value of debt, especially when the risk of financial distress is high. d) Agency costs are irrelevant in firms with high financial leverage.

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