Which one of the following statements is TRUE?
A) A corporate executive health club is an example of a nonpecuniary benefit.
B) When lenders protect themselves from the risk of asset switching by raising the interest rate, the firm's WACC can decrease.
C) A lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.
D) A supplier substituting a lower-quality raw material without approval is an example of asset switching.
E) An agency problem occurs when an owner/manager sells stock to an outside investor and the owner/manager fears the outside investor will consume too many perquisites.

Question

Which one of the following statements is TRUE?
A) A corporate executive health club is an example of a nonpecuniary benefit.
B) When lenders protect themselves from the risk of asset switching by raising the interest rate, the firm's WACC can decrease.
C) A lender calling in a corporate loan and then lending the funds out to a safer borrower is an example of asset switching.
D) A supplier substituting a lower-quality raw material without approval is an example of asset switching.
E) An agency problem occurs when an owner/manager sells stock to an outside investor and the owner/manager fears the outside investor will consume too many perquisites.
​

Quizplus · Accepted Answer

Nonpecuniary benefits are benefits that are not in the form of money. A corporate executive health club, offering services like fitness and relaxation facilities, represents a nonmonetary form of compensation or benefit.

Which One of the Following Statements Is TRUE