Toby Was Elected to the Board of Trustees of the Chi-Town

question 11

Multiple Choice

Toby was elected to the board of trustees of the Chi-Town Corporation (CTC) four years ago.He loves to brag about his position as a board member,but he cares more about the prestige than doing a good job.As a member of the board at CTC,Toby serves on several committees.However,although the board and all of the committees meet on a regular basis,Toby has never attended any of these meetings and doesn't participate in any board decisions.If the insiders at CTC enter into a series of bad business deals that cause CTC to suffer a financial loss,what is Toby's potential liability?

• A) Toby will be shielded from liability by the corporate veil.
• B) Toby cannot be held responsible because he did not vote to approve the transactions.
• C) Toby will be liable because his inattention will likely be considered negligence and a breach of his fiduciary duty of care.
• D) Toby will be held liable because by accepting the board position he has opened himself up to liability for the actions of the corporation.

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Definitions:

Test Statistic

A value calculated from sample data that is used in a hypothesis test to decide whether to reject the null hypothesis.

T Test

A statistical hypothesis test used to compare the means of two groups and determine if they come from the same population by analyzing the difference.

T Value

A value calculated in a t-test that assesses the difference between two means relative to the variation in the data.

Critical Value

The threshold or point on the test distribution that is compared with the test statistic to determine whether to reject the null hypothesis.