Issuing Favorably Priced Shares to Management but Not to Other

question 68

True/False

Issuing favorably priced shares to management but not to other shareholders will normally  constitute a violation of the fiduciary duty.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance.

Variable Costs

Expenses that change in proportion to the activity of a business, such as materials and labor.

Marginal Cost

The incremental cost involved in creating an extra unit of a product or service.

Diseconomies of Scale

Occur when a firm's costs per unit increase as its output increases, opposite to economies of scale.