The following statement about the residual loss is correct.
A) There is a residual loss if the monitoring costs exceed the bonding costs.
B) The residual loss consists of the loss in firm value caused by the agent not running the firm in the interest of the principal and which cannot be prevented by monitoring and bonding.
C) The residual loss is the difference between the monitoring costs and the bonding costs.
D) None of the above.
Correct Answer:
Verified
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