What is meant by the term 'fiduciary duty' in relation to embezzlement?

The term 'fiduciary duty' refers to a legal obligation that one party has to act in the best interests of another party. In the context of embezzlement, this concept is especially relevant because embezzlement often involves a breach of this duty. A fiduciary, such as a financial advisor, accountant, or corporate officer, is entrusted with the management of another person’s or entity’s assets. This trust relationship requires the fiduciary to act with loyalty and care, prioritizing the interests of the principal over their own. When the fiduciary misappropriates funds or assets for personal gain, this constitutes embezzlement, as they are violating their duty to act faithfully and with integrity regarding the funds entrusted to them.

The other options do not accurately capture the meaning of fiduciary duty. A type of insurance coverage refers to financial products designed to protect against certain risks, while an investment strategy speaks to planned methods for selecting investments for financial gain. A contractual agreement implies a mutual understanding documented between parties but does not encompass the ethical obligations inherent in a fiduciary relationship. Thus, the correct choice highlights the fundamental legal and ethical responsibilities involved in fiduciary relationships, particularly with respect to the handling of others' funds and assets