Ralph,the Owner of a Medium-Sized Business,which Is Operated as a Sole

question 13

Multiple Choice

Ralph,the owner of a medium-sized business,which is operated as a sole proprietorship,gives his vice-president,Wanda,authority to hire a new manager for the firm.Ralph gives Wanda detailed instructions about the salary she can contract to pay,but tells her that under no circumstances can she make commitments regarding the new manager's pension.Wanda contracts to hire Nick for the new managerial position.But to get Nick to sign up,she has to make certain specific pension commitments to him.Some years later,Nick sues Ralph for copping out on those pension commitments.Which of the following is true in this case?

• A) Ralph has no liability,because he expressly told Wanda that she didn't have authority to bind him on pension matters.
• B) Ralph is bound on the basis of Wanda's apparent authority.
• C) Ralph is bound on the basis of Wanda's implied authority.
• D) Ralph is bound on the basis of Wanda's actual authority.

---

Definitions:

Stock Selection

The process of choosing stocks for investment based on criteria such as financial health, market position, and growth potential to maximize returns.

Bond Selection

The process of choosing bonds for investment based on factors such as yield, maturity, credit quality, and issuer.

Unique Risk

Also known as unsystematic or idiosyncratic risk, it refers to the risk associated with a particular company or industry that can be mitigated through diversification.

Securities

Financial vehicles denoting an ownership interest in corporations available on public exchanges, debt obligations held against governmental entities or businesses through bonds, or potential ownership through options trading.