Which of the Following Is False Regarding the Liability of Directors

question 7

Multiple Choice

Which of the following is false regarding the liability of directors and officers for criminal behavior in the U.S.?

• A)Directors and officers can be held personally responsible for the crimes of other employees within the organization when they have failed to adequately supervise the employee's behavior.
• B)Directors and officers who use insider information to trade the corporation's stock for a profit can be held liable for breaching their fiduciary duty.
• C)A court may not find a corporate officer criminally liable for conduct of an employee unless the officer profited personally from the illegal activity.
• D)Directors and officers can be held personally responsible for their own crimes.
• E)According to the responsible person doctrine,an officer can be held criminally liable for conduct of an employee if the court determines that a responsible person would have known about and could have prevented the illegal activity.

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Definitions:

Financial Leverage

Employing borrowed funds to amplify the potential gains from an investment, while also elevating the likelihood of incurring losses.

ROA

Return On Assets indicates how efficiently a company utilizes its assets to generate profit, calculated as net income divided by total assets.

Total Assets

The total of everything of value owned by a company, including cash, investments, property, and equipment, as recorded on the balance sheet.

Operating Efficiency

A measure of how well a company uses its assets and liabilities internally to produce a profit.