Which of the Following Is False Regarding a Principal's Duties

question 52

Multiple Choice

Which of the following is false regarding a principal's duties to an agent?

• A) An agent can sue the principal if the principal does not fulfill duties owed to the agent.
• B) An agent may be entitled to contract remedies but not tort remedies.
• C) If the principal has failed to meet duties owed to the agent, the agent can refuse to act on behalf of the principal until the failure is remedied.
• D) The principal has a duty to compensate an agent for services provided unless the parties have agreed that the agent will act gratuitously.
• E) The principal has a duty of reimbursement and indemnification to the agent for authorized expenditures.

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Definitions:

Financial Leverage

The use of borrowed money (debt) in an effort to increase the potential return of an investment.

Liquidity and Working Capital

The ability of a company to meet its short-term obligations using its most liquid assets, and the difference between current assets and current liabilities, respectively.

Capital Intensity Ratio

A financial metric that measures the amount of capital required to generate one dollar of revenue, indicating how capital-intensive a business is.

Total Asset Turnover Ratio

A financial metric that measures the efficiency of a company's use of its assets in generating sales revenue, calculated as net sales divided by total assets.