To reduce the principal-agent problem A) boards-of-directors ...

[DyllonKazuo]

To reduce the principal-agent problem
 
  A) boards-of-directors can tie the salaries of top management to the profitability of the firm.
  B) managers can inflate profits on financial statements.
  C) managers can take on more risk than they disclose to investors.
  D) managers can hide liabilities by not disclosing them on financial statements.

Question 2

Subprime mortgages are
 
  A) mortgages issued to borrowers who fail to document that their incomes are high enough to afford their mortgages.
  B) mortgages issued to borrowers with flawed credit histories.
  C) mortgages which are bundled together by financial institutions and sold to investors.
  D) government-backed mortgages issued by Fannie Mae and Freddie Mac.

[shaquita]

Answer to Question 1

A

Answer to Question 2

B

[DyllonKazuo]

Excellent

[epscape]

Gracias!