A Principal Who Authorizes an Agent to Enter into a Contract

question 87

True/False

A principal who authorizes an agent to enter into a contract with a third party is liable on the contract.

Appreciate the role of coordination of effort, division of labor, and authority hierarchies in defining organizational characteristics.

Recognize the significance of a common goal or purpose for organizational focus and unity.

Understand the importance of true communication, learning, and management practices that foster organizational trust and performance.

Acknowledge the multifaceted nature of organizational socialization and its stages.

---

Definitions:

All Equity Firm

A business that is financed entirely through equity capital, having no debt components in its capital structure.

Capital Structure

The combination of a company's long-term debt, specific short-term debt, common equity, and preferred equity, constituting how a firm finances its overall operations and growth.

Coupon Rate

The interest rate stated on a bond when issued, which represents the annual interest payment as a percentage of the bond's face value.

Unlevered Cost of Capital

The cost of capital for a company without debt, reflecting the risk of its equity alone.