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:

Capital Budget

A budget allocating money for the acquisition or maintenance of fixed assets such as buildings, machinery, and equipment.

Stock Split

A corporate action where a company divides its existing stock into multiple shares to boost liquidity without changing overall market capitalization.

Total Market Value

The aggregate valuation of a company or asset in the marketplace, calculated by multiplying price by quantity of shares.

Improved Liquidity

Refers to an increase in the ease with which assets can be converted into cash without a significant loss in value.