The conflict resulting from a manager's desire to increase the firm's risk without increasing current borrowing costs and lenders' desire to limit lending is one effect of the ________ problem.
A) agency
B) leverage
C) capital
D) variable cost

Question

Quizplus · Accepted Answer

The conflict described is an example of the agency problem, where the interests of managers (agents) may not align with those of lenders (principals), leading to differing objectives regarding risk and borrowing.

The Conflict Resulting from a Manager's Desire to Increase the Firm's