[Machine Malfunction] Michael, the President of a Health Club Operation

question 35

Multiple Choice

[Machine Malfunction] Michael, the president of a health club operation called Head-to-Toe Health Club, convinced the board of directors to approve a large purchase of a certain fitness machine called "Perfect Body." Michael had carefully investigated the machine and did a presentation to the board on its purported benefits. Unfortunately, after the purchase, it was announced that "Perfect Body" was actually a very dangerous machine that should not be used. The manufacturer of "Perfect Body" went bankrupt, and Head-to-Toe lost $200,000 on the purchase of the machines. The shareholders are furious and want to sue Michael and the directors. In an attempt to appease the ring leader of the shareholders, Simone, the board of directors agrees to allow her to purchase stock of the company at below its fair market value. Simone purchases a considerable amount of stock on that basis, but says that the shareholders plan to continue with an action against Michael and the board members.
-Regarding the liability of Simone, if any, for purchasing the stock at below its fair market value, which of the following is true?

• A) If the board wanted to offer it to her, they had that right, and there is no consequence to Simone.
• B) She is liable for double the stated corporate value of the stock in addition to any price she already paid.
• C) She is liable for the stated corporate value of the stock in addition to any price she already paid.
• D) She is liable for paying the difference between the price she paid for the shares and the stated corporate value of the shares.
• E) She is liable for paying the difference between the price she paid for the shares and the stated corporate value of the shares plus a $10,000 penalty.

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Definitions:

Psychological Disorders

Mental health conditions characterized by significant disturbances in thoughts, emotions, or behavior, which can impact daily functioning and well-being.

Cultural Values

The core principles and ideals upon which an entire community exists, influencing behaviors, beliefs, and norms within a society.

Incidence Rate

A measure used in epidemiology to describe the frequency of new cases of a disease or condition in a population over a specific period of time.

Bipolar Disorders

A group of mood disorders characterized by dramatic shifts in a person's mood, energy, and ability to function, typically between manic and depressive states.