When Is a Principal Liable for Her Own Conduct in Tort

question 62

Essay

When is a principal liable for her own conduct in tort involving the use of agents?

Identify and differentiate between direct and indirect bankruptcy costs, and understand their impact on firms.

Grasp the concept of homemade leverage and its relevance to individual investors.

Understand the relationship between a firm's capital structure and its weighted average cost of capital (WACC).

Distinguish between various states of insolvency and their implications for firms.

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Definitions:

Performance Metrics

Quantitative and qualitative measurements used to assess and monitor the efficiency, performance, and success of an organization or individual.

Compensation

Payments or benefits provided to employees in exchange for their services or to cover losses or damages.

Managerial Economics

An academic discipline that applies microeconomic theory and quantitative methods to solve business decision problems.

Agency Costs

are expenditures or losses incurred from the conflict of interest between principals (owners/shareholders) and agents (managers).