The Key to Determining Whether a Principal Is Liable for Contracts

question 9

True/False

The key to determining whether a principal is liable for contracts made by his agent is the amount of compensation paid to the agent.

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Definitions:

Preferred Stock

Preferred stock is a type of equity security that provides dividends and certain privileges in the event of liquidation before common stock, but typically does not carry voting rights.

Perpetuity

An annuity that has no end, or a stream of cash payments that continue indefinitely.

Efficient Markets Hypothesis

The theory that all known information is already reflected in stock prices, implying that stocks always trade at their fair value, making it impossible to consistently achieve higher returns than the market overall.

Security Prices

The cost at which a particular financial security, such as stocks or bonds, is bought or sold in the market.