The Legal Environment of Business: Text and Cases
9th Edition
ISBN: 9781305764460
Author: Frank B Cross/ Roger LeRoy Miller
Publisher: CENGAGE C
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Chapter 5, Problem 2RE
Summary Introduction
Case summary: A person JS is the CEO of a company RL. The company RL deals in buying life insurance policies at a discount from patients who are on their death bed and sells the same to investors. The terminally ill patients receive payments as a percentage of future death benefits. The investors buy the insurance policies at 85 percentage of the value of future benefits. The patients utilize this money for their treatment, and the investors are entitled to a guaranteed
To find:The actions of the company RL are ethical.
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James Stilton is the chief executive officer (CEO) of RightLiving, Inc., a company that buys life insurance policies at a discount from terminally ill persons and sells the policies to investors. To RightLiving pays the terminally ill patients a percentage of the future death benefit (usually 65 percent) and then sells the policies to investors for 85 percent of the value of the future benefit. The patients receive the cash to use for medical and other expenses. The investors are “guaranteed” a positive return on their investment, and RightLiving profits on the difference between the purchase and sale prices. Stilton is aware that some sick patients might obtain insurance policies through fraud (by not revealing the illness on the insurance application). Insurance companies that discover this will cancel the policy and refuse to pay.Stilton believes that most of the policies he has purchased are legitimate, but he knows that some probably are not. Using the information presented in…
James Stilton is the cief executive oiffcer (CEO) of Rightsliving. inc Company that buys life insurance policies at discount from terminally ill people and sells the policies to investors RightLiving pays the terminally ill pateitns a percentage of the future death benefits and then sells the policies to investors for 85% of the value of the future beneffits. The patients receive the cash to use for medical and other expenses and the investotors are gauranteed a postitive return on thier investment. The diffreence beteween the purchase and sale price is the RightLiving profit.
Stilton is aware that some sick patiente may obtain insurance policies through fraud (by not revealing thier illness on the insurance app). An insurance company that discovers such fraud will cancel the policy and refuse to pay. Stilton believes that most of the policies he has purchases are legitimate but he knows that some are probably not.
Question
Under the categorical imperative, are the actions of…
Jeremy is considering a corporate recapitalization as a gifting technique and has come to his financial planner for more information. Which of the following statements regarding corporate recapitalization are CORRECT?
The stock is recapitalized and divided into nonvoting preferred stock and voting common stock.
Jeremy retains control of the corporation through the voting rights associated with his preferred stock.
Recapitalization can be used in any corporation.
The gift of stock given to the junior family members may qualify for valuation discounts.
A)
II, III, and IV
B)
I and III
C)
II and IV
D)
I and II
Chapter 5 Solutions
The Legal Environment of Business: Text and Cases
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