The Separation of Ownership and Control in Corporations Requires the Board

question 45

Multiple Choice

The separation of ownership and control in corporations requires the board of directors to do all of the following except:

• A) allocate rewards in ways that encourage shareholder value creation.
• B) assess managerial performance.
• C) divest themselves of corporate stock and future ownership rights.
• D) review and approve important management decisions.

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Definitions:

Preferred Stock

A type of stock that entitles the holder to a fixed dividend, whose payment takes priority over that of common-stock dividends.

Dividend

A portion of a company's earnings that is distributed to shareholders, typically in the form of cash payments or additional shares.

Rate Of Return

The fiscal benefit or detriment arising from an investment over a certain period, computed as a percentage of the initial cost of the investment.

Annual Percentage Rate

APR, a measure that reflects the cost of borrowing on an annual basis, incorporating not just the interest rate but also any fees and other charges involved.