If a Board of Directors Is to Be Effective,it Needs

question 74

Multiple Choice

If a board of directors is to be effective,it needs to allocate its scarce time to the ________ issues to which its members can add ________.

• A) most clear; capital
• B) most critical; value
• C) newest; information
• D) hardest; time

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Definitions:

Cost of Capital

The imperative return rate a firm has to achieve on investment initiatives to retain its market worth and draw investment.

Target Capital Structure

The capital structure that management strives to maintain as new capital is raised. An estimate of the structure that maximizes stock price.

Preferred Stock

A category of equity in a company that ranks above common stock in terms of claims on assets and profits, typically involving stable dividend payments.

Breakpoint

A volume discount in the sales charge or load of a mutual fund, offered to investors when investments exceed a specific dollar amount.