The Test for Determining Whether or Not a Gratuitous Agent

question 45

Multiple Choice

The test for determining whether or not a gratuitous agent has breached their duty of care to the principal is:

• A)A subjective test which entails consideration of what the agent thought was reasonable action in the circumstances.
• B)A subjective test which entails consideration of the degree of care a professional of reasonable skill and competence would exercise.
• C)An objective test which entails consideration of the degree of care that the agent ordinarily uses in attending to their own affairs.
• D)An objective test which entails consideration of the degree of care a reasonable person would exercise.

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Definitions:

Payable Semiannually

This term indicates that a payment, often in the context of bond interest or dividends, is made twice a year.

Yield To Maturity

The total return anticipated on a bond if the bond is held until it matures, including both interest payments and capital gains.

Face Value

The nominal value stated on a financial instrument, such as a bond or stock certificate, representing the amount due at maturity.

Coupon

In finance, a coupon refers to the interest payment received by a bondholder from the bond issuer at specified intervals.