Saul Was Elected to the Board of Trustees of Round

question 73

Multiple Choice

Saul was elected to the board of trustees of Round Way Corp.four years ago.He makes sure everyone knows he's a board member and always brings it up at parties.Unfortunately he cares more about the prestige than doing a good job so he hasn't attended board meetings nor is he attending committee meetings to which he's been assigned.If the insiders at Round Way enter into a series of bad business deals causing financial loss to the corporation:

• A) Saul is shielded from liability under the corporate veil.
• B) Saul cannot be held responsible because he didn't vote to approve the transactions.
• C) Saul will be liable because his inattention will likely be considered negligence on his part.
• D) Saul 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:

Net Present Value

A technique used in finance to determine the value of a series of future cash flows discounted back to their value in today's dollars.

Time Value

The principle that money in hand today is valued higher than the equivalent amount at a future date, owing to its ability to earn more over time.

Cash Flows

The total amount of money being transferred into and out of a business, particularly affecting its liquidity.

Arbitrary Cutoff Point

A subjective point or threshold set by decision-makers or researchers, beyond which certain actions are taken, rules applied, or categorizations made.