Which of the Following Statements About the Board of Directors

question 21

Multiple Choice

Which of the following statements about the board of directors is NOT true?

• 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 the directors are full-time employees of the company.
• E) Outside directors help perform the monitoring function of the board.

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Definitions:

Par Common Stock

The nominal or face value of common stock as specified in the corporate charter, which bears no direct relation to its market value.

Purchase Price

The amount of money paid to acquire a good, service, or asset.

Stock Split

An action by a company to divide its existing shares into multiple shares to boost the liquidity of the shares, although not affecting the company's overall market capitalization.

Retained Earnings

The portion of a company's profits not distributed as dividends to its shareholders but kept in the company to reinvest in its core business or to pay debt.