Which of the following refers to the possibility that a firm's owners or managers will take actions contrary to the promises contained in the covenants of the securities the firm issues to raise funds?

Question

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Agency costs refer to the possibility that a firm's owners or managers may act in their own interests and not in the best interests of the firm's investors, potentially resulting in a breach of the covenants contained in the securities issued by the firm. This can lead to a reduction in the value of the securities and result in losses for investors.

Which of the Following Refers to the Possibility That a Firm's