Which one of the following statements is TRUE?
A. Asset switching occurs when a company borrows money for a safe investment but uses it for a risky investment.
B. An example of an agency cost is when the board of directors pays a dividend to shareholders.
C. An example of an agency cost is when an attorney hires an expert witness for a trial.
D. The commission required by the Federal Housing Agency for a small business loan is an example of an agency cost.
E. An example of an agency cost is the salary of the agent hired to work for the principal.
Answer: A
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