In an agency relationship,the costs incurred by agents to ensure that a principal is compensated if they take any action that is detrimental to the principal is known as:
A)monitoring costs
B)bonding costs
C)recurring losses
D)residual losses

Question

Quizplus · Accepted Answer

Bonding costs refer to the expenses incurred by the agent to establish credibility and build trust with the principal. These costs include things like obtaining a surety bond or purchasing liability insurance. Bonding costs are a form of incentive for the agent to act in the best interests of the principal because they help ensure that the principal will be compensated if the agent takes any actions that are detrimental.

In an Agency Relationship,the Costs Incurred by Agents to Ensure