The Syndication Agreement Generally Creates a Principal/agent Relationship in Which

question 9

Multiple Choice

The syndication agreement generally creates a principal/agent relationship in which the syndicator (agent) is empowered to act on behalf of the investors (principals) . In most principal/agent relationships, there is the concern that the agent will act in the agent's best interest, not in the best interests of the principal. This issue is more commonly referred to as:

• A) adverse selection
• B) moral hazard
• C) dual agency
• D) signaling

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Definitions:

Merchandise Inventory

Merchandise inventory refers to the products a company has available for sale to customers at any given time.

Note Payable

A written promise to pay a specific sum of money to a party on demand or at a predetermined future date.

Account Payable

The amount of money owed by a business to its suppliers or creditors for goods and services purchased on credit.

Notes Payable

Liabilities represented by written promises to pay specific sums of money at future dates, typically evidenced by formal instruments of credit.