Which of the following is an example of agency cost?

a. payment of interest

b. costs incurred for setting up an agency

c. payment of income tax

d. failure of making the best investment decision

The Principal-Agent Problem arises:

a. both of the options

b. none of the above

c. because managers have little incentive to work in the interest of shareholders when this means working against their own self-interest.

d. because of the separation of ownership and control in a corporation.