How could your firm avoid the risks of dealing through an agent with an unknown principal?
A) Insist on a guarantee by the intermediary.
B) Have the intermediary identify the principal to th
C) It is not possible to avoid these risks unless you
D) In practice, the risks are minimal provided you de

Question

Quizplus · Accepted Answer

By having the intermediary identify the principal to the firm, the risk of dealing with an unknown principal can be mitigated. It allows the firm to conduct due diligence on the principal before entering into any business transactions. Insisting on a guarantee by the intermediary may not be sufficient protection, as the intermediary might not have the financial capability to honor the guarantee. Option C is not a viable solution since it is not practical to avoid all business risks. Option D is an incorrect statement since dealing with an unknown principal poses significant risks that should not be underestimated.

How Could Your Firm Avoid the Risks of Dealing Through