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SSC Audit Tax Finance P-II QUESTION #6192
Question 1
The 'Agency Problem' in finance is defined as a conflict of interest between:
  • The firm and the government.
  • The firm and its customers.
  • Stockholders (principals) and managers (agents).✔️
  • Lenders and the general public.
Correct Answer Explanation
It arises when agents (managers) do not act in the best interest of the principals (owners) [cite: 10].