Which of the Following Statements Is Incorrect Regarding Boards of Directors

question 11

Multiple Choice

Which of the following statements is incorrect regarding boards of directors?

• A) If a new venture organizes as a corporation, it is not legally required to have a board of directors, but it is strongly recommended.
• B) A board is typically made up of both inside and outside directors.
• C) The board is responsible for declaring dividends.
• D) Most boards meet formally three or four times a year.
• E) The boards for publicly-traded companies are required by law to have audit and compensation committees.

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Definitions:

Reactions

Responses or adjustments made by individuals, markets, or materials to external changes or stimuli.

Oligopoly

An economic condition where few companies have significant control over an industry or product, limiting competition and potentially influencing prices and production.

Herfindahl-Hirschman Index

An index used to assess the concentration of market power to determine the degree of competition in a sector.

Squared Market Shares

A measure used in economics to assess the level of market concentration by squaring the market share percentages of each firm within the industry and then summing them.