Eve Is a Director of Fab Stuff Corporation

question 12

Multiple Choice

Eve is a director of Fab Stuff Corporation. Without informing Fab, Eve goes into business with GR8 Things, Inc., in competition with Fab. Eve is li?able for breach of

• A) no duty or rule
• B) the business judgment rule.
• C) the duty of care.
• D) the duty of loyalty.

---

Definitions:

Sustainable Rates Growth

The peak growth rate a firm can achieve in its earnings without resorting to more debt financing or selling additional shares.

External Funding Needs

The amount of money a company needs to raise from outside sources to finance its operations or growth plans.

Negative External Financing

A situation where a company is reducing its external borrowing and financing activities, possibly indicating a shift towards internal funding methods.

External Financing Need

The amount of funding a firm requires from external sources to finance its planned investment or business activities beyond what is generated internally.