Which of the Following Is False Regarding Classification of Principals

question 30

Multiple Choice

Which of the following is false regarding classification of principals?

• A)If the third party does not know that an agent is acting on behalf of a principal,an undisclosed principal is involved.
• B)When the third party is aware that the agent is making an agreement on behalf of a principal and also knows who the principal is,the principal is a disclosed principal.
• C)Classification of the principal is important because it helps determine the principal's liability.
• D)An unidentified principal is in the same classification as a partially disclosed principal.
• E)If the third party is aware of the principal's existence but not his or her identity,the principal is classified as a disclosed principal.

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Definitions:

Capital Structure

The mix of different forms of capital a company uses to finance its operations and growth, including debt, equity, and hybrid securities.

Bankruptcy Risk

The possibility that a company or individual will be unable to meet their financial obligations when they come due, leading to bankruptcy proceedings.

Financial Characteristics

Attributes that describe the financial health and performance of a company, including liquidity, debt levels, revenue growth, and profitability.

Industry Characteristics

These are the unique traits and trends that define the operations, competitive environment, and market behavior of a specific industry.