Sela Agrees to Act on Thom's Behalf,subject to Thom's Control,and

question 21

Multiple Choice

Sela agrees to act on Thom's behalf,subject to Thom's control,and Thom trusts Sela to so act.They set out the terms in a written document,which they both sign.This is

• A)an agency by agreement.
• B)an agency by estoppel.
• C)an agency by ratification.
• D)not the creation of an agency relationship.

---

Definitions:

Security Characteristic Line

Represents a regression line that displays the relationship between a security's returns and the market's returns, used to assess risk and performance.

Security Market Line

A representation of the capital asset pricing model (CAPM) which displays the expected return of a security as a function of its systematic, or non-diversifiable, risk.

Cyclical Beta

A measure of how sensitive a stock's price is to economic cycles, with higher values indicating greater sensitivity.

Market Risk Premium

The additional return over the risk-free rate that investors require to compensate them for the risk of holding a risky market portfolio.