Ruth Darma Is a Shareholder Who Is Not Involved in the Day-To-Day

question 8

True/False

Ruth Darma is a shareholder who is not involved in the day-to-day activities of an S corporation. Her interest in the business is a passive activity.

---

Definitions:

Signaling Mechanism

A method through which parties communicate information indirectly or directly to influence perceptions and decisions of others, often used in markets and negotiations.

Insurance Policy

A contract between an insurer and policyholder specifying coverage terms, including the risks insured against, the duration of coverage, and the amount of premiums.

Low Risk

Pertaining to situations, investments, or activities that have a minimal chance of negative outcomes or losses.

High Deductible

Refers to health insurance plans with higher deductible amounts, meaning the insured must pay more out-of-pocket before insurance coverage starts.