A Principal May Be Liable to a Third Person for an Agent's

question 24

True/False

A principal may be liable to a third person for an agent's unauthorized contracts.

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Definitions:

Credit Default Swaps

Financial derivative contracts that transfer the credit exposure of fixed income products between parties, used as a form of insurance against default on loans or bonds.

Interest Rate Risk

Interest rate risk is the potential for investment losses due to fluctuations in interest rates, affecting the value of fixed-income securities inversely.

Protection Sellers

Protection sellers in a financial context typically engage in credit derivatives markets, selling credit protection to hedge against the risk of default on underlying credit assets.

Protection Buyers

In derivatives trading, individuals or entities that purchase credit protection to hedge against potential losses from a credit event like default.