Does an agent competing with the principal breach his or her duty of loyalty? What is the proper course of action for the principal in such a case?
What will be an ideal response?
Agents are prohibited from competing with the principal during the course of an agency unless the principal agrees. The reason for this rule is that an agent cannot meet his or her duty of loyalty when his or her personal interests conflict with the principal's interests. The principal may recover the profits made by the agent as well as damages caused by the agent's conduct, such as lost sales. An agent is free to compete with the principal when the agency has ended unless the parties have entered into an enforceable covenant-not-to-compete.
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In a short essay, define power, urgency and legitimacy with respect to stakeholder theory.
What will be an ideal response?
The management scientist's fiance informed him that if they were to be married, he would also have to welcome her mother into their home. The management scientist should model this decision as a contingency constraint
Indicate whether this statement is true or false.
How does Karmarkar's Algorithm differ from the simplex method?
A) It follows a path of integer solutions. B) It follows a path inside the feasible region. C) It follows a counterclockwise path around the outside edges of the feasible region. D) It follows a clockwise path around the outside edges of the feasible region. E) It incorporates a second set of artificial variables.
The MacMillen Company has equal amounts of low-risk, average-risk, and high-risk projects. The firm's overall WACC is 12%. The CFO believes that this is the correct WACC for the company's average-risk projects, but that a lower rate should be used for lower-risk projects and a higher rate for higher-risk projects. The CEO disagrees, on the grounds that even though projects have different risks, the WACC used to evaluate each project should be the same because the company obtains capital for all projects from the same sources. If the CEO's position is accepted, what is likely to happen over time?
A. The company will take on too many high-risk projects and reject too many low-risk projects. B. The company will take on too many low-risk projects and reject too many high-risk projects. C. Things will generally even out over time, and, therefore, the firm's risk should remain constant over time. D. The company's overall WACC should decrease over time because its stock price should be increasing. E. The CEO's recommendation would maximize the firm's intrinsic value.