Discuss the agency problem of adverse selection.
What will be an ideal response?
Adverse selection occurs when information asymmetry increases the likelihood of selecting inferior alternatives. In principal-agent relationships, for example, adverse selection describes a situation in which an agent misrepresents his or her ability to do the job. Such misrepresentation is common during the recruiting process. Once hired, the principal may not be able to accurately assess whether the agent can do the work for which he or she is being paid.
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Consider the after-tax cash flows for Project S and Project L:
Project S Project L Year 1 $3000 0 Year 2 0 $3000 A rational person would prefer ________. A) Project L because they can avoid taxes by receiving cash flows later B) Project S because the money can be reinvested sooner C) information about profits instead of cash flows D) neither investment over the other
The pricing component of the global marketing mix is:
A. the same in domestic and foreign markets B. fairly simplistic due to the strength of the U.S. dollar abroad C. the easiest element to implement successfully D. complicated by product penetration strategies E. a complex matter due to tariffs, exchange rates, and government regulations
Various financial data for SunPath Manufacturing for 2012 and 2013 follow. 
What is the percentage change in the multifactor labor and raw materials productivity measure for SunPath between 2012 and 2013?
A. -9.22 B. 2.33 C. -0.53 D. 10.39 E. -2.88
If a 9% coupon bond that pays interest every 182 days paid interest 112 days ago, the accrued interest would be
A. $28.15. B. $26.77. C. $27.98. D. $27.69. E. $27.35.