Theory question 104
Stock Exchange(a) As an employee of the stock exchange market, explain to a group of investors five securities they could trade in.
(b) State five duties of an agent to his principal.
Show the model answer
(a) Any five, explained: ordinary shares (part ownership, variable dividend, voting rights); preference shares (fixed dividend paid first); debentures (long-term loans to a company at fixed interest); stocks (shares converted into a fund that can be traded in any amount); government bonds/gilt-edged securities (loans to government at fixed interest); treasury bills; convertible loan stock; municipal (local government) bonds.
(b) Any five: obey the principal's lawful instructions; act with reasonable care and skill; act in good faith and not make secret profit; not delegate duties without permission; keep proper accounts and render them; avoid conflict of interest; keep the principal's information confidential; pass on all money received for the principal.
Duties of an agent, not of the principal.