Richard Writes a Letter to Sarah Authorizing Her to Sell

question 77

Multiple Choice

Richard writes a letter to Sarah authorizing her to sell his car and sends a copy of the letter to Timothy, a prospective purchaser. The next day, Richard sends a letter to Sarah revoking her authority, but he fails to notify Timothy. Sarah:

• A) has actual authority to sell the car to Timothy.
• B) has implied authority to sell the car to Timothy.
• C) has apparent authority with respect to Timothy to sell the car.
• D) is empowered under the doctrine of respondeat superior to negotiate the contract.

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Definitions:

Hedge

Hedging involves making an investment to reduce the risk of adverse price movements in an asset, typically by taking an offsetting position in a related security.

Put Option

An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Interest Rate

The percentage of a sum of money charged for its use, often expressed on an annual basis.

Financial Risk Management

The practice of protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk.