Net Agency Costs of EQuity

CFA Level II
#1

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

#2

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

#3

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

#4

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

#5

Corp finance

#6

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

#7

agree with B