Asked by Ninh Thi Thuy Trang on Jul 30, 2024
Verified
Randy is a director of STEM Inc. As a director, with respect to the corporation, Randy is expected to use
A) prudent business judgment.
B) perfect business judgment.
C) prolonged business judgment.
D) pluperfect business judgment.
Prudent Business Judgment
Decision-making by business leaders that is cautious, reasonable, and in the best interest of the organization, based on available information.
Business Judgment
The decision-making process undertaken by company directors or officers that is characterized by a reasonable level of discernment and is in the interest of the company.
- Understand the roles and responsibilities of corporate directors and officers, including the duty of care and the duty of loyalty.
Verified Answer
AA
Ayomide AkinfolarinAug 04, 2024
Final Answer :
A
Explanation :
Directors of a corporation are expected to use prudent business judgment, which is part of their fiduciary duties to act in the best interest of the corporation and its shareholders. This is known as the "business judgment rule," which provides directors with a presumption that they have acted on an informed basis, in good faith, and in the honest belief that the action taken was in the best interest of the company. The other options do not represent standard legal or business principles.
Learning Objectives
- Understand the roles and responsibilities of corporate directors and officers, including the duty of care and the duty of loyalty.