Which One of the Following Is an Example of Breach

question 104

Multiple Choice

Which one of the following is an example of breach of fiduciary duty?

• A) The directors of the corporation refuse to give a pay raise to the employees although they had not received a pay raise for five years.
• B) A director profited $120 000 from a contract between the corporation and a firm in which he had an interest after he made full disclosure of his interest to the board of directors and abstained from the vote on the contract.
• C) An officer of the corporation learned of a business opportunity intended for the corporation and intercepted it for his own benefit.
• D) The directors refused to declare a dividend, contrary to the request by its preferred shareholders.
• E) A shareholder owning 2 percent of the outstanding shares started a business in direct competition with the corporation in which he held shares.

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Definitions:

Px(MUx)

This expression denotes the price of a good (Px) multiplied by its marginal utility (MUx), commonly used in economic analysis of consumer choice.

MUx/MUy

Represents the marginal utility of good x relative to the marginal utility of good y, often used in consumer choice theory to analyze optimum consumption points.

TUx/Px

An economic expression evaluating the marginal rate of substitution, which measures how much of one good a consumer is willing to give up for another good, maintaining a constant level of utility.

Marginal Utility

The extra pleasure or advantage gained from using another unit of a product or service.