Which of the Following Statements About the Board of Directors

question 68

Multiple Choice

Which of the following statements about the board of directors is false?

• A) Board members are elected by stockholders.
• B) The board can be held legally accountable for a company's actions.
• C) The board has the legal authority to hire, fire, and compensate the CEO.
• D) All directors are full-time employees of the company.
• E) Outside directors help perform the monitoring function of the board.

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Definitions:

Hotelling Rule

A principle from the economics of non-renewable resource management suggesting that the net price of a resource should increase at the rate of interest over time to ensure efficient extraction and usage.

Marginal Cost

The expense incurred from manufacturing an extra unit of a product or service.

Hotelling Rule

An economic theory that predicts how the price of a non-renewable resource should rise over time, balancing between resource depletion and the interest rate.

Interest Rate

The cost of borrowing money or the return on investment, expressed as a percentage of the principal amount per time period.