The majority of monitoring and bonding costs will be borne by:
A) principals.
B) agents.
C) shareholders.
D) creditors.

Question

Quizplus · Accepted Answer

Monitoring and bonding costs are costs associated with ensuring that agents (individuals who act on behalf of principals) act in the best interest of the principals. Since these costs are incurred by the principals to ensure that the agents act in their best interest, it is fair to say that the majority of monitoring and bonding costs will be borne by the agents.

The Majority of Monitoring and Bonding Costs Will Be Borne