CIMA Exam CIMAPRA17-BA1-1 Topic 1 Question 92 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 92
Topic #: 1

[All CIMAPRA17-BA1-1 Questions]

Which ONE of the following is NOT a symptom of the principal-agent problem in company XYZ?

AThe pay of the directors of XYZ is not related to the company's financial performance

BXYZ loses money following a risky investment in a new line of business

CThe family of the Chief Executive of XYZ use the company jet for shopping trips

DXYZ's Board conceals information about losses from shareholders

Show Suggested Answer

Suggested Answer: C

by Taryn at Jul 10, 2024, 11:18 PM

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France

30 days ago

I'd say D is the correct answer. Concealing information from shareholders is definitely a symptom of the principal-agent problem, where the managers are not acting in the best interests of the owners.

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Nickole

20 days ago

A) The pay of the directors of XYZ is not related to the company's financial performance

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Domitila

1 months ago

Haha, the company jet for shopping trips? That's a bold move! But I guess it does fit the principal-agent problem where the managers put their own interests ahead of the shareholders'.

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Elizabeth

8 days ago

A) The pay of the directors of XYZ is not related to the company's financial performance

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Rory

1 months ago

Hmm, I'm not sure. The family using the company jet for shopping trips seems like a clear case of the principal-agent problem to me. Maybe I should double-check my understanding of this concept.

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Alonso

2 months ago

I think the answer is B. The principal-agent problem is about misaligned incentives between the owners and the managers, not about the company's financial performance.

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