The Business Judgment Rule

question 14

Multiple Choice

The business judgment rule:

• A) permits directors to do their job.
• B) keeps judges out of corporate management.
• C) encourages directors to serve.
• D) accomplishes all of the above goals.

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Definitions:

Volatile

Characterized by or subject to rapid or unexpected changes, especially in the context of financial markets or securities prices.

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period.

Strike Price

The set price at which an option contract can be bought or sold when it is exercised.

Pre-Tax Net Profit

The amount of profit earned by a company before taxes are deducted.