Why do shareholders have a greater preference for risk than do managers?
A) Shareholders are always richer than managers, and can afford to take more risk.
B) Shareholders can diversify risk by holding many securities, while a manager's career is tied up with the firm.
C) Because they are investing in the stock market, shareholders must naturally prefer taking more risk than managers.
D) Managers do not like risk because it hurts the value of the company.
Correct Answer:
Verified
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