Which one of the following statements is TRUE?
A) An example of an agency relationship is when the board of directors hires a CEO to run a company.
B) An example of an agency relationship is when the CEO nominates a slate of candidates to be on the board of directors.
C) An example of an agency relationship is when a supervisor hires a forklift operator.
D) The supervisor-employee relation between a production line supervisor and a production line operator is an example of an agency relationship.
E) An agency cost is the wage required to pay someone who is hired to perform a service.

Question

Quizplus · Accepted Answer

An agency relationship is a business relationship in which one person or entity (the agent) is authorized to act on behalf of another (the principal). The example given in choice A is a classic example of an agency relationship, with the board of directors serving as the principal and the CEO serving as the agent. The other choices are not accurate examples of agency relationships.

Which One of the Following Statements Is TRUE