A Manager Hires an Agent to Obtain a License to Build

question 33

Multiple Choice

A manager hires an agent to obtain a license to build a warehouse in an industrial district. The agent gets caught offering a bribe to a government official for issue of the license. Which of the following describes the manager's liabilities?

• A) The manager is not liable since the use of an agent absolves him of any responsibility.
• B) The manager is liable since the agent used part of his fees for bribery, although the manager was unaware of the agent's intentions.
• C) The manager is not liable if the agent can prove that extortion, rather than bribery, took place.
• D) The manager is liable if he was aware of the fact that part of the agent's fee will be used as a bribe.
• E) The manager is liable only if the act of building the warehouse at the given location is illegal.

---

Definitions:

Liquidity

The ease with which an asset or security can be converted into cash without affecting its market price.

Speculators

Investors who attempt to profit from market volatility by buying and selling stocks or other financial instruments, often taking higher risks.

Hedgers

Individuals or entities that enter financial contracts to reduce exposure to risk, typically by locking in prices for commodities or currencies.

Positions

Refers to the holdings or inventory of investments or trading assets owned by institutions or individuals.