Which one of the following statements is TRUE?
A. An example of asset switching is borrowing money to buy equipment but instead taking it to Las Vegas to gamble with it.
B. The commission required by the Federal Housing Agency for a small business loan is an example of an agency cost.
C. An example of an agency cost is the salary of the agent hired to work for the principal.
D. Creditors have a claim on a firm's earning stream through the dividend payments they receive.
E. An example of asset switching is an option to exchange one piece of real estate for another.
Answer: A
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Which of the following is measured by the payback period method?
A) The period for which an investment is expected to be useful B) The expected cash inflows and outflows of an investment C) The estimated length of time to recover the cost of an investment D) The economic life of an investment
A limited liability company is treated like a partnership under federal tax law and has the limited liability feature of corporations
Indicate whether the statement is true or false
A benefit of extranets is:
A. reduced costs B. coordination C. customer satisfaction D. all of the above
Why are publicly traded companies in the U.S. required to publish quarterly financial statements?
What will be an ideal response?