3. The Principal-Agent Problem arises: (A) because of the separation of ownership and control in a corporation. (B) because managers have much incentive to work in the interest of shareholders when this means working against their own self-interest. (C) Both a and b (D) None of the above

9. Which of the following statements is FALSE? (A) When a bond trades at a price equal to its face value, it is said to trade at par. (B) When a bond is trading at a discount, the price drop when a coupon is paid will be larger than the price increase between coupons, so the bond's discount will tend to decline as time passes. (C) As interest rates and bond yields rise, bond prices will fall. (D) Ultimately, the prices of all bonds approach the bond's face value when the bonds mature and their last coupon is paid.

3. The Principal-Agent Problem arises:
(A) because of the separation of ownership and control in a corporation.
(B) because managers have much incentive to work in the interest of shareholders when this means working against their own self-interest.
(C) Both a and b
(D) None of the above

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