Which Two of the Following Are Examples of Breaches of Fiduciary

question 104

Multiple Choice

Which two of the following are examples of breaches of fiduciary duty?

• A) The directors of the corporation, contrary to the request of the shareholders, refused to declare dividends.
• B) A director of a corporation, as director, learned of a good deal and took advantage of it for himself before the corporation had the opportunity to do so.
• C) A promoter of a corporation sold property to the corporation for three times what he paid for it after he made full disclosure of his interest to an independent board of directors, which voted for the purchase.
• D) A shareholder started a business that competed directly with the business.
• E) An employer charged his employees for parking after supplying it free for years.

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Definitions:

Price Elasticity of Demand

Measures how much the quantity demanded of a good responds to a change in its price, with higher elasticity indicating greater sensitivity to price changes.

Marginal Cost of Production

The increase in total production cost that arises from producing one additional unit of a good or service.

Reservation Prices

The maximum price a consumer is willing to pay for a good or service, beyond which the consumer will forgo the purchase.

Full Marginal Cost

The total cost that includes both the direct and indirect costs for producing one additional unit of a good or service.