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Question 1
Susan is about to be nominated to stand for election to the board of UpAndComing, Inc. If she is elected, what should be the first question that she asks?
Correct Director and Officer (D&O) insurance is a must for any individual who is considering sitting on a corporate board. Such insurance provides a source of funds if and when a director or a board is sued for violation of her corporate duties. Failing such insurance, a director may find that she must personally pay for the suit and any associated legal fees without any ability to require the corporation to reimburse her.
Incorrect! Director and Officer (D&O) insurance is a must for any individual who is considering sitting on a corporate board. Such insurance provides a source of funds if and when a director or a board is sued for violation of her corporate duties. Failing such insurance, a director may find that she must personally pay for the suit and any associated legal fees without any ability to require the corporation to reimburse her.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Question 2
Nick has been sued and found guilty of committing fraud on the corporation. Which of the following is he least likely to receive as a result of this outcome:
Correct
Incorrect!
Correct While it is unlikely Nick received the BJR's protection for his act and is not likely to get his job back, it is a foregone legal certainty that the company will not be allowed to reimburse him for any fines associated with his guilt for committing fraud. While the rules vary from state-to-state as to what exactly a firm can indemnify a director for, one thing for certain which will not be allowed is the payment of fines for a director that has been found guilty for fraud.
Incorrect! While it is unlikely Nick received the BJR's protection for his act and is not likely to get his job back, it is a foregone legal certainty that the company will not be allowed to reimburse him for any fines associated with his guilt for committing fraud. While the rules vary from state-to-state as to what exactly a firm can indemnify a director for, one thing for certain which will not be allowed is the payment of fines for a director that has been found guilty for fraud.
Correct
Incorrect!
Correct
Incorrect!
Question 3
A firm has decided that it would like to expand its D&O insurance policy to cover more situations if its directors or officers are sued. When going out to purchase such a policy, the firm is likely to discover:
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!
Correct After the collapse of Enron, WorldCom and a variety of other legal scandals in the late 1990's and early 2000's, it became clear that corporate misdeeds were more rampant than had been expected. Moreover, insurance providers realized that they had not been doing a job of accurately gauging the risk associated with providing D&O plans. As such, there has been a marked upswing in the price of D&O insurance over the period.
Incorrect! After the collapse of Enron, WorldCom and a variety of other legal scandals in the late 1990's and early 2000's, it became clear that corporate misdeeds were more rampant than had been expected. Moreover, insurance providers realized that they had not been doing a job of accurately gauging the risk associated with providing D&O plans. As such, there has been a marked upswing in the price of D&O insurance over the period.