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The following statement appears in "Agency Costs and Unregulated Banks: Could Depositors Protect Themselves?" by Catherine England (Cato Journal 7, no, 3 [Winter 1988]):
The agency costs literature argues that both agents and principals are aware of the potential conflicts of interest and abuses that can arise in an agency relationship. But neither group is expected to passively accept the limitations imposed by the potential problems and inefficiencies. The recognition of agency costs creates incentives for both groups to take steps to minimize and control the problem. To protect their interests, principals have reason to develop and incorporate contractual terms designed to channel the behavior of agents in desirable directions and/or to limit their ability to engage in unacceptable activities. In addition, principals setting a value on agents' services will consider the costs associated with the principal/agent relationship and reduce accordingly the compensation that would be paid to agents in a world of perfect information. Faced with the possibility of reduced compensation, agents will not only agree to contractual terms that reassure principals, but will also develop mechanisms that tend to make principals more confident.
a. What are agency costs?
b. What can principals do to reduce agency costs?
The accountant for Scenic Photographic Supply Company has established the following overhead cost pools and activity drivers.
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Prior to C's affirmation valuation for Rs. 15,000 in the estimation of area and structures would be recorded furthermore, procurement for terrible obligations would be brought upto Rs. 820.
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If the probability of a 20% return is 0.7 and the probability of a 4% loss is 0.3, what is the expected return to the nearest whole percentage?
(a) Journalize the adjusting entries on May 31. (b) Prepare a ledger using T accounts. Enter the trial balance amounts and post the adjusting entries.
Calculate the value of the two accounts at the end of one year, and recommend to Joseph which account he should choose.
Find out a company at that your organization might consider a competitor. Show the time series for revenues over as many years as you can find. Based on this time series, how is the company doing?
Additionally, the total return on the stock is evenly divided between capital gains yield and a dividend yield. If the company's policy is to always maintain a constant growth rate in its dividend, what is the current dividend per share?
q. after graduating from graduate school you create it big-all because of your success in financial management. you
Bey Co. issued 20-year, $1,000 bonds at a coupon rate of 7 percent. The bonds make annual payments. If the YTM on these bonds is 5 percent, what is the current bond price?
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