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In Business / High School | 2025-07-08

Which of the following risks is covered by a Directors and Officers (D&O) policy? 1. Mergers 2. Acquisitions 3. Takeovers Options: - All 1, 2, 3 - Only 1, 3 - Only 2, 3 - Only 1, 2

Asked by JGottem1130

Answer (1)

A Directors and Officers (D&O) policy is a type of insurance policy that protects the personal assets of corporate directors and officers, as well as the financial well-being of the company, in the event they are sued for alleged wrongful acts while managing the company.
Coverage under a D&O policy typically includes claims made against directors and officers for decisions affecting the company, including strategic moves such as mergers, acquisitions, and takeovers. These activities can lead to lawsuits from shareholders, customers, or other parties who might claim that the directors and officers did not act in the best interest of the company or violated fiduciary duties.
Explanation of Coverage:

Mergers (1): During mergers, stakeholders might disagree with how the merger is handled, potentially leading to claims against the directors.
Acquisitions (2): Directors can face lawsuits claiming poor decision-making or financial misrepresentation during an acquisition.
Takeovers (3): Takeovers can be contentious and result in legal action against directors for the decisions made during the process.

Correct Option: All 1, 2, 3.
Thus, a Directors and Officers (D&O) insurance typically covers the risks and liabilities associated with all these activities. Therefore, the correct answer to the question is the option that includes all three activities: mergers, acquisitions, and takeovers.

Answered by MasonWilliamTurner | 2025-07-21

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