Part A) Examine the situations below. Which one is most likely to cause an agency problem?

a. forgoing a loan when doing so will create losses for the firm

b. refusing to lower selling prices if doing so will reduce the net profits

c. refusing to expand the company if doing so will lower the value of the equity

d. agreeing to pay bonuses based on the market value of the company stock rather than on the firm's level of sales

e. increasing current profits when doing so lowers the value of the firm's equity

Part B) Which of the following groups are involved in monitoring the top management of U.S. public corporations? I. Shareholders II. Board of Directors III. Independent accountants IV. Lenders

a. I only

b. I and II only

c. II and III only

d. I, II, and III

e. I, II, III, and IV

Part C) Which of the following statements are correct regarding Sarbanes-Oxley (SOX) and Dodd-Frank (DF)?

I. DF requires that public firms offer an advisory vote to shareholders on top executive compensation.

II. SOX requires that management certify that the firm's financials are materially accurate.

III. SOX compliance has made it easier for the U.S. to attract foreign listings of public firms.

IV. DF requires companies to disclose the ratio of CEO pay to the lowest paid line worker.

a. I and II only

b. I and III only

c. I, II, and III only

d. I, II, and IV only

e. I, II, III, and IV

*please answer all parts to the question*