The Purpose of an Agency Relationship Is To

question 12

Multiple Choice

The purpose of an agency relationship is to:

• A) allow the principal to extend his business activities by authorizing agents to enter into contracts with third persons on the principal's behalf.
• B) encourage business growth by protecting employers from liability for torts or criminal activity.
• C) allow a principal to contract through agents in ways he would not be able to contract on his own,such as creating valid contracts in situations where the principal could only create voidable contracts on his own.
• D) eliminate the distinction between employees and independent contractors.

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Definitions:

Option Pricing Theory

A framework used in finance to determine the fair value of an option based on factors such as the stock price, strike price, volatility, time to expiration, and risk-free interest rate.

Acquisitive Firms

Companies that focus on growth through acquisitions, buying other companies to increase their market share, diversify their products, or gain other strategic advantages.

Conglomerate Mergers

The union of companies, which are involved in totally unrelated business activities, to diversify or expand their operations.

Shareholders

Individuals or entities that own shares in a corporation, giving them ownership interests in the company.