Question

In finance, agency costs refer to:

	The costs incurred by firms when they hire agents such as lawyers and accountants.
	The costs of resolving conflicts of interest between managers and shareholders.
	The costs incurred by shareholders in their role as agents of managers.
	None of the above
	The costs incurred by a partnership when it becomes an agency.

Answer 1

In the field of finance,agency cost will be referring to the cost which are incurred by the shareholder in their role as principal of the managers and the cost of resolving conflicts of interest between managers and shareholders.

All the other statement are false

Correct answer will be option (B) These are the cost of resolving conflict of interest between managers and shareholders.