Net Agency Costs of EQuity

Net agency costs of equity consist of three components, which is not one of the components? A. Monitoring costs B. Financial Distress Costs C. Bonding Costs D. Residual Losses

B. distress costs come into picture in the static trade off theory

where is this info in the schweser books? i’m drawing a blank.

B You don’t actually need to this, just figure out which one doesn’t belong there.

Corp finance

Ok I confess I made this question up…but I was studying corp. fin. and came across Monitoring Costs, Residual Losses, and Bonding Costs and completely forgot what any of these meant…just a refresher… I guess I should of thought of a better ans. then financial distress costs… good job though… EDIT: Found in Schweser… Book 3… Page 71

agree with B