Explain social contract in the context of Legitimacy Theory. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Which of the following processes describe how positive theories are developed: - Principles Assumptions Objectives Definitions/Actions. What is the main premise underlying the pecking order theory? James Chen, CMT is an expert trader, investment adviser, and global market strategist. The monetary policy can influence demand. A) It is also called contracting What influences these theories (social contracting, corporate social responsibility, system theory, legitimacy theory, stakeholders' theory, intellectual theory) in respect to reporting and how reporting is influenced by each of these theories? What is the main reason that an agency relationship exists in the corporate form of business organizations? A dual agency is an agency relationship in which the agent acts concurrently for both of the principals in the transaction. The statement is FALSE. Jo Amy is a science teacher. Learn the definitions of agency theory, agent, and principal. But even some of those with higher credit scores will pay less once the new plan takes effect. The fee will still cost the home buyer with the lower credit score more. A) The licensee failed to disclose a material fact concerning the transaction. b. b. State the dominance principle with respect to portfolio theory. Under Florida law, it is presumed that all licensees are operating as transaction brokers unless a single agent or no brokerage relationship is established. Those agreements are: An agency relationship is a relationship between a principal and an agent, where the principal gives the agent legal permission to act on the principal's behalf. Study with Quizlet and memorize flashcards containing terms like Which of the following statements is true regarding monetary and fiscal policies? Explain the purpose of the debt covenant from a contracting theory perspective. 2023. About Fannie Mae & Freddie Mac | Federal Housing Finance Agency. A duty of loyalty is also implied within the principal-agent relationship, which requires the agent to refrain from putting himself in a position that creates or encourages conflict between his interest and the interest of the principal, also known as the principal-agent problem. Which disclosure notice must be signed by the buyer and the seller in certain nonresidential transactions? They act on behalf of the principal, use only the authority given by the principal, carry out the wishes of the principal, should be free from bias and self-interest, and should get no secret profits. Why is the residual equity theory more in line with recent research in finance than entity and proprietary theory? Compare and contrast between Legitimacy Theory and Stakeholder Theory. What is the main reason that an agency relationship exists in the corporate form of business organizations? 2003-2023 Chegg Inc. All rights reserved. However, despite the new plan making it easier for borrowers with scores in that range to get a loan, they still end up paying higher upfront fees than those borrowers making a similar down payment but with higher credit scores. What essential components of corporate governance according to stakeholder and agency theories are experienced in the workplace? This means Wilma is an agent, or a party who is legally authorized to act on behalf of another party in business transactions. All other trademarks and copyrights are the property of their respective owners. A. Cliques are a basic aspect of society. The statement is FALSE. International Negotiation: Political & Legal Impacts. LendingTree, https://www.lendingtree.com/home/refinance/cash-out/. Which of the following characteristics does NOT accurately describe the behavior of a change agent who uses a rational persuasion strategy? A principal is not free to revoke an agency relationship in all circumstances. I feel like its a lifeline. This mortgage insurance moves some of the risk from Fannie Mae and Freddie Mac to a private mortgage insurer, which allows the GSEs to charge a lower loan-level price adjustment (LLPA). Additionally, the new plan makes it easier for those with a poorer credit score (639 or below) to buy homes, even with a down payment of 5% . Karine Jean-Pierre | 1.6K views, 59 likes, 3 loves, 75 comments, 8 shares, Facebook Watch Videos from RT: Press briefing by White House Press Secretary. Under the common law tradition of the United States, all Wilma and I have an express agreement, which means that both the principal and agent agreed to the agency relationship through a written or oral agreement. (a) Buying a six-pack of Gatorade water. Additionally, the new plan makes it easier for those with a poorer credit score (639 or below) to buy homes, even with a down payment of 5% or lower. What were some of the concepts that made you curious or prompted you to look at the relationship between business and society differently? In order to have a smoothed rate of growth , we use : In relation to a company , investors are least concerned with : 1. Why would a company issue zero-interest bonds? What do you call the underlying assumption that the life of a company can be divided into an artificial time period? See Fannie Mae'sLoan-Level Price Adjustment Matrixfor a breakdown of real-world pricing scenarios across a range of credit scores and other factors. Contracts for Sale of Goods: Definition & Explanation, Corporation Dissolution & Process | How to Dissolve a Corporation, Estate for Years vs. The principal-agent problem is a conflict in priorities between a person or a group and the representative authorized to act for them. -. Under the old plan, that fee would have been $2,400 (0.75%). Society is unconsciously linked together by mutual acquaintances. He did not respond to our questions. A residential sale is defined as the sale of improved residential property of four or fewer units, the sale of unimproved residential property intended for use as four or fewer units, and the sale of agricultural property of ten or fewer acres. What kinds of agency problems may arise and how are they resolved? A. Predictive value. In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act. Implied agreements have no verbal or written confirmation or contract. Tort Liability in Agency Relationships: Definition & Law. Duties and Responsibilities of a Principal. The opposite is true: a person who gives or delegates authority to another is referred to as the principal; the person who accepts the authority is referred to as the agent. Ans. "Fiduciary Duty.". The duty to use skill, care, and diligence is a duty of transaction broker and single agent relationships. Accessed 27 Apr. The law has described the employee-employer connection as a Accessed 26 Apr. | 35 2023, https://web.archive.org/web/20230418203624/https://amp.washingtontimes.com/news/2023/apr/18/joe-biden-hike-payments-good-credit-homebuyers-sub/. Which individual is involved in making sure their company complies with the monetary unit assumption? master-servant relationship. So, a borrower in that credit score range making a down payment of $80,000 (20%) on a home value of $400,000 would now have to pay an upfront fee of $4,000 (1.25%) on the loan of $320,000 (80%). The new pricing framework will change what the agency calls upfront fees, or payments homebuyers make when they close on a property. The answer is PROPERTY IS LOCATED IN A FLOOD ZONE AREA THAT REQUIRES FLOOD INSURANCE COVERAGE. numerous articles and social media posts claimed, was changing how much money homebuyers will pay when they're closing on a property based on their credit scores, The rumors were based on real changes to what the Federal Housing Finance Agency (FHFA) calls "upfront fees," or fees borrowers pay when they're closing on a mortgage that are meant to cover the lender's expenses. Urban Institute, 27 Apr. Apparent authority protects Rusty's from losing money on the business deal as long as Rusty's has good reason to believe that Wilma is my agent. What is the principal-agent relationship? Social class was solely based on one's relationship to the means of production. This type of agency is neither express nor implied. Which one of the following does economic theory suggest? interest of maintaining the fiscal stability of the enterprise. Examples include an investor picking a fund manager or someone hiring an attorney for legal work. The principal is a party who gives legal authority to another to act on his or her behalf in business transactions. Jim Parrott, nonresident fellow at the nonprofit research organization Urban Institute, and Janneke Ratcliffe. Definition, Types of Agents, and Examples, Fiduciary Definition: Examples and Why They Are Important, Agency Problem: Definition, Examples, and Ways To Minimize Risks, Principal-Agent Problem Causes, Solutions, and Examples Explained, Attorney-in-Fact: Definition, Types, Powers and Duties, Receivership: What It Is, How It Works, vs. Bankruptcy. The difference in assessed fees is about $4,000 more for a buyer with a 640 credit score than for a buyer with a 740 credit score, based on a $300,000 mortgage. The answer is ACCOUNTING FOR ALL FUNDS. The primary responsibilities in the employer-agent relationship lie, The law has described the employee-employer connection as a, Select the statement that does not support the narrow view of non-managerial employees', responsibilities to their employer, the idea that the employer exercises a great deal of control. The answer is TRANSITION TO TRANSACTION BROKER. But some buyers with higher credit scores, depending on other factors, would see a decrease in upfront fees. Both principals and agents can be individuals or can be business entities. 4 Identify the statement that does not correctly present the fiduciary relationship that is said to exist between managerial employees and employers: A) Managers have special expertise that owners must rely on, so they are given wider responsibilities . The agency relationship allows the agent to work on behalf of the principal as if the principal was present and acting alone. Full disclosure is a single agent duty. Why? Under the old plan, that fee would have been $2,400 (0.75%). I didn't have time to listen to him, so I had Wilma take care of it. One member of a partnership may bind the other partners in contract because of the law of: O Fiduciary duty 0 Reciprocal duty 0 Agency 0 Reciprocal. Some examples are: There are different types of agreements within an agency relationship: express and implied agreements. Invalid acts of agency can also become valid through estoppel. copyright 2003-2023 Study.com. In each scenario, the principal is the individual seeking out the service or advice of a professional, while the agent is the professional performing the work. (C) In actual fact, not all agents are employees. The buyer or seller is not required to sign the disclosure unless transitioning from one brokerage relationship to another. Which of the following statements is NOT accurate about the California Disclosure Regarding Real Estate Agency Relationship Form?A) It must be signed before the seller signs any listing agreement with the agent, or, in the case of the buyer, before that buyer signs the purchase contract.B) This form is required for leases of residential property for more than one year and for the sale of a mobile home, IF the mobile home is offered for sale or sold through a real estate agent.C) California law does NOT require that all real estate agents provide a written disclosure to the buyer OR the seller, depending on which party the agent represents.D) California law requires that all real estate agents provide a written disclosure to the buyer AND the seller, regardless of which party to the transaction the agent represents. They are simply implied between both parties. C. Small groups are powerful influences on c. Describe some typical pairs of entities that might be common in business, and describe their relationships, whether many-to-many, one-to-many, many-to-one, or one-to-one. Can agency theory provide an explanation for the various remuneration components? All in all, the agency said, the adjustmentsaim to give people from various backgrounds "equitable access to affordable and sustainable housing.". A) A premise underlying this research approach is that decision makers may need to be taught how to use information they are unfamiliar with. as a sequel to an October 2022 move by the FHFA to eliminate the fees altogether for some first-time homebuyers. B: The transactional approach is conceptually identical to the capital maintenance conc, Which of the following is NOT a reason why users need government and not-for-profit external financial statements? A principal is a party who gives legal authority to another to act on his or her behalf in business transactions. The answer is THE BROKER MUST RETAIN THE DISCLOSURE DOCUMENTS FOR FIVE YEARS EVEN IF A NONRESIDENTIAL TRANSACTION THAT UTILIZED DESIGNATED SALES ASSOCIATES FAILS TO CLOSE. What Is the Principal-Agent Relationship? "Fannie Mae and Freddie Mac's New Pricing Is Not Punishing Those with Better Credit: Follow the Numbers." 2023, https://www.cnn.com/2023/04/26/homes/mortgage-changes-may-1/index.html. The relationship between the principal and the agent is called the "agency," and the law of agency establishes guidelines for such a relationship. Operations Management questions and answers, Which statement is not true of the agency lessons in math, English, science, history, and more. ll in all, the agency said, the adjustmentsaim to give people from various backgrounds, The changes have generated fierce criticism from conservatives. The principal and agent create an agency relationship. C. Verifiability. Agency can also be created through an implied agreement. concept? The relationship is governed by agency laws that spell out what is and is not allowed. What is the principal agent relationship? She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area. In that statement, Thompson sought to "address some of these misconceptions directly." 1995 - 2023 by Snopes Media Group Inc. The change agent must convince others of the cost-benefit value of the change. 2023. B) Its underlying assumption is that individuals act in their own best self-interest. "No, Fannie Mae and Freddie Mac Aren't Penalizing People with Good Credit to Help People with Bad Credit." The answer is EXERCISE LIMITED CONFIDENTIALITY. Wilma has apparent authority, and I'll be 'estopped' from denying the legality of any deal she makes with Rusty. The purpose of an agency relationship is for a principal to have an agent that can act on their behalf. Which statement is not true of the agency How has it been derived? All agency relationships are fiduciary relationships. over the nature and terms of employment with very little discretion given to the employee: Identify the statement that does not correctly present the fiduciary relationship that is said to. What is a social contract and how does it relate to organizational legitimacy? Accessed 27 Apr. D) None of the above. Become a Study.com member to unlock this answer! Which of the following statements is NOT accurate about the California Disclosure Regarding Real Estate Agency Relationship Form?A) It must be signed before the seller signs any listing agreement with the agent, or, in the case of the buyer, before that buyer signs the purchase contract.B) This form is required for leases of residential property for more than one year and for the sale of a . In actual fact, not all agents are . A general agent is authorized by the principal to perform only acts related to a business or to employment of a particular nature. Consumer Financial Protection Bureau, https://www.consumerfinance.gov/data-research/consumer-credit-trends/mortgages/lending-neighborhood-income-level/. An agency relationship includes an agreement or contract. A An agency relationship must include compensation. Accessed 27 Apr. Some housing experts questioned the assertion that the new plan penalizes borrowers with good credit to subsidize those with poor credit. Dealing honestly and fairly and accounting for all funds apply to all three disclosure relationships. (a) What is a variable interest entity? The primary responsibilities in the employer-agent relationship lie. For example, let's say Wilma contracts with Rusty's Rawhide to buy 500 rawhide bones. Which of the following below is not a characteristic of a Limited Liability Company? Which of the following best describes an assumption economists make about human behavior? In April 2023, numerous articles and social media posts claimed U.S. President Joe Biden was changing how much money homebuyers will pay when they're closing on a property based on their credit scores. - Definitions/Actions Principles Assumptions Objectives. Thom Tillis, U.S. What are the assumptions of efficient contract theory? If Rusty's decides to sue for collection of the bill, they'll likely sue Barks and Bubbles and me, rather than Wilma. c. The, Which of the following terms means knowing how a business is run and how it is influenced by external forces, and knowing and understanding the overall industry? Identify the accounting assumption, principle, or constraint that describes each situation below. A single agent relationship may be changed to a transaction broker relationship (or another relationship), provided the agent first obtains the principal's written consent to the change in relationship. The licensee is not required to give written notification of the brokerage relationship duties in a transaction broker relationship. 2023. All other trademarks and copyrights are the property of their respective owners. The broker serves as a neutral party helping to facilitate the process without giving guidance or representation to the parties in the transaction. The statement is TRUE. Confidential information learned during the course of the single agency cannot be divulged before or after the transaction has concluded and the agent-principal relationship has ended. b) To determine the ability of the entity to continue to provide servic, What non-quantitative aspects may also be relevant to a funding decision? https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-from-FHFA-Director-Sandra-Thompson-on-Mortgage-Pricing.aspx. (a) What are typical maturities, denominations, and interest payments of a corporate bond? Jim Parrott, nonresident fellow at the nonprofit research organization Urban Institute, and Janneke Ratcliffe, vice president for housing finance policy at the institute, wrote: "Some have suggested that the decline in fees for borrowers who put down a smaller down payment shows that FHFA is overcharging those who pose less risk to the government-sponsored enterprises (GSEs) so that it can undercharge those who pose more risk. A) Fulfillment of the brokerage relationship's purpose B) Bankruptcy of the principal C) Withdrawal of an offer to purchase D) Death of a seller's broker. Note that both principals and agents can be individuals or can be business entities. A court may find the existence of an agency relationship only if the parties have expressly agreed to create one C. An agency results from any indication of consent by the principal that the agent may act on the principal's behalf and under . In October,upfront fees were eliminatedfor first-time homebuyers "at or below 100 percent of area median income (AMI) in most of the United States and below 120 percent of AMI in high-cost areas.". What is the basic principle underlying activity-based costing? Therefore, withdrawal of an offer to purchase does not terminate the single agent relationship entered into with the seller. Which of the following statements regarding the going concern concept is true? B) Imperfect markets theory. What are the relationships between a parent company and a subsidiary company? You can learn more about the standards we follow in producing accurate, unbiased content in our. In Florida, which type of brokerage relationship is presumed? A receivership is a court-appointed solution that can assist creditors to recover funds in default and help troubled companies to avoid bankruptcy. The California Disclosure about Real Estate Agency Relationship Form is used due to the fact that, the state of California considers that it is necessary that the implied ones in the process of buying and selling properties know very well about the process that the agencies will develop. - Objectives Definitions/Actions Assumptions Principles. ", The GOP senators' letter came a day after FHFA's Thompson issued astatementciting "a fundamental misunderstanding about the fees charged by the [Fannie Mae and Freddie Mac] Enterprises, and why they were updated.". "I can also confirm that the President has not spoken about this issue." A single agent is a broker who represents, as a fiduciary, the buyer or seller but not both in the same transaction. C. Agency relationships are regulated by statutory and contract laws, but not common laws. The agency relationship definition is a relationship between two entities, a principal and an agent, where the principal gives the agent legal permission to act on the principal's behalf. Wilma's not authorized to place orders for my store, but Rusty doesn't know this, and I didn't tell him. vice president for housing finance policy at the institute. Set a price that allows the minimum number of units to be sold at the highest unit price c. Set a price that will maximize revenues d. Set a pri. Additionally, the new plan makes it easier for those with a poorer credit score (639 or below) to buy homes, even with a down payment of 5% or lower. I would definitely recommend Study.com to my colleagues. This means that the principal accepted and recognized an invalid act of agency. And even those with higher credit scores will pay less once the new plan takes effect. Which information must be disclosed to a prospective buyer regarding a particular property? Under the common law tradition of the United States, all "Lending by Neighborhood Relative Income Level." The brokerage relationship exists between the brokerage company and the seller. RMIT International University Vietnam, Ho Chi Minh City. The statement is TRUE. 2023. C) Because managers have greater freedom from day-to-day supervision by owners . Which of the following is not true regarding agency theory? Setting the Record Straight on Mortgage Pricing: A Statement from FHFA Director Sandra L. Thompson | Federal Housing Finance Agency. Agency relationships do not exist in the absence of a contractual agreement B. Here are the main issues she pointed out: Thompson noted that fees would increase for buyers in some categories and decrease for those in others, but that "[t]he updated fees, as was true of the prior fees, generally increase as credit scores decrease for any given level of down payment." "The White House does not direct the actions of independent agencies,"a White House spokesperson told Snopes. Which of the following statements about agency relationships is true? The answer is WITHDRAWAL OF AN OFFER TO PURCHASE. I asked Wilma to purchase supplies on my behalf, and Wilma agreed to do so. What are the different types of bonds issued by a corporation or governmental agency? Conversely, some people with lower credit scores will pay less.
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