While at Home,Kyle Kinston,the President and Chief Executive Officer of Remstat,Inc

question 16

Multiple Choice

While at home,Kyle Kinston,the president and chief executive officer of Remstat,Inc. ,is called by the CEO of Viokam Corporation,who asks Kinston if Remstat would be interested in buying about 25 percent of the outstanding shares of Viokam.Remstat is a billion dollar conglomerate that has contemplated acquiring Viokam for some time,but Kinston tells Viokam's CEO that Remstat is not interested.Kinston tells the CEO,however,that KKIM,Inc. ,is willing to buy the shares.Kinston is the 100 percent shareholder of KKIM.Viokam sells the shares to KKIM for $35 million.A year later,KKIM sells the shares for $55 million to a mutual fund company.When Remstat's directors discover KKIM's purchase and sale of the Viokam shares,they sue Kinston on behalf of the corporation.Which of the following is correct?

• A) Kinston has exceeded her authority to act for the corporation.
• B) Kinston has self-dealt with the corporation.
• C) Kinston has done nothing wrong.
• D) Kinston has usurped a corporate opportunity.

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Definitions:

Additive Inverse Property

A principle stating that for any real number, there exists another real number that, when added together, equals zero.

Distributive Property

A property indicating that multiplying a sum by a number gives the same result as multiplying each addend by the number and then adding the products.

Principal Investment

The initial amount of money invested, before any earnings or interest.

Simple Interest

A method of calculating the interest charge on a loan or financial investment based on the initial principal and a fixed interest rate over time.