An Agent Owes a Fiduciary Duty to His Principal; a Director

question 18

Multiple Choice

An agent owes a fiduciary duty to his principal; a director owes a fiduciary duty to the corporation; partners owe a fiduciary duty to the firm and to the other parties.Which of the following is not true with regard to one's fiduciary duty?

• A) An agent would be in breach of his fiduciary duty if he let his interest conflict with his duty.
• B) A fiduciary is in a position of trust and owes true loyalty to the person depending on him.
• C) A shareholder owning a business that secretly competes with the corporation is in breach of fiduciary duty.
• D) A partner secretly competing with his own firm would be in breach of his fiduciary duty.
• E) An agent failing to disclose to his principal all information relating to the principal's business transaction would be a breach of his fiduciary duty.

---

Definitions:

Hedge Ratio

The proportion of an asset's or liability's exposure that is hedged by a derivative contract, reflecting the effectiveness of the hedge.

Forward Contact

A financial contract between two parties to buy or sell an asset at a specified future time at a price agreed upon today, often used for hedging foreign exchange risk.

Planned Purchase

A forecasted acquisition of goods or services that an individual or organization intends to make, often based on budget considerations or strategic planning.

Cash Flow Hedge

A type of hedge that protects against the variability in cash flows that is attributable to a particular risk associated with a recognized asset or liability or a highly probable forecasted transaction.