The Primary Function of an Agent in a Principal-Agent Relationship

question 71

Multiple Choice

The primary function of an agent in a principal-agent relationship is to:

• A) protect the principal from legal liability
• B) conduct business on behalf of the principal
• C) enter into contracts with the principal
• D) operate as a partner with the principal
• E) maintain the principal's status quo

---

Definitions:

Restrictive Covenants

Clauses in contracts that limit certain actions of the parties involved, often used in employment contracts and loan agreements to protect business interests.

Dividend Policy

A company's strategy or guideline on whether to retain its profits or distribute them to shareholders in the form of dividends, and at what frequency.

Dividend Practice

The policy a company follows in deciding the amount, timing, and manner of dividend distributions to its shareholders.

Corporate Dividend Preference

A feature of preferred stock entitling holders to receive dividends before any dividends can be distributed to common stockholders.