Separating the functions of principals and agents is likely to result in: a. immobility of financial capital. b. diversification of investment risk. c. reduction in agency costs. d. better goal congruence. e. information symmetry.

Carey company is borrowing $225,000 for one year at 9.5 percent from second intrastate bank. the bank requires a 15 percent compensating balance. the principal refers to funds the firm can effectively utilize (amount borrowed − compensating balance). a. what is the effective rate of interest? (use a 360-day year. input your answer as a percent rounded to 2 decimal places.) b. what would the effective rate be if carey were required to make 12 equal monthly payments to retire the loan?

You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each. the portfolio's beta is 1.12. you plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.50. what will the portfolio's new beta be? do not round your intermediate calculations.

Dan wants to start a supermarket in his hometown, and wants to get into the business only after finding out about the market and how successful his business might be. the best way for dan to gain knowledge is to: