Reference no: EM131128729
1. What is the standard applied to examine managers' duty of care?
A. The degree of care expected from an intelligent person faced with a business problem.
B. The care expected from a shopkeeper while selling expensive goods
C. The care expected from an ordinarily prudent person in similar circumstances
D. The degree of care expected from a prudent businessman during economic downturn
2. Sunland Corporation issued dividends to its shareholders. Each shareholder was aware that the corporation would be insolvent and unable to pay its creditors following the dividend distribution. Philibus Co. was one such creditor. Under the Model Business Corporation Act (MBCA), primary liability to Philibus Co.:
A. lies with the shareholders because they received the distribution from the corporation with knowledge of the impending insolvency.
B. does not lie with the shareholders because they can never be held liable to creditors of the corporation.
C. lies with the directors because they authorized the unlawful distribution of dividends
D. does not lie with the directors because it is their duty to place the interests of the shareholders above everything else.
E. None of the above answers is correct.