In an Owner-Manager Agency Relationship the Problem of Risk Aversion

Multiple Choice

In an owner-manager agency relationship the problem of risk aversion arises because:

A) shareholders prefer the managers to take fewer risks in order to maximise the returns on their investment.
B) managers prefer to make decisions that are less risky for the entity as they have more to lose than the shareholders.
C) managers have less capital invested in the entity than shareholders.
D) shareholders generally have no other sources of income.