The directors of Urban Credit Corp.—a consumer, corporate, and investment bank—voted to invest in subprime lending. Soon after, the housing market declined, foreclosures increased, and other subprime lenders collapsed.

Subsequently, Urban Credit suffered significant losses.

Were Urban Credit’s directors liable for their decision to engage in this course of business? No. Directors are not insurers of business success. Honest mistakes of judgment and poor business decisions on their part do not make them liable to the corporation or its shareholders for damages. This is the ______________ rule.

For the rule to apply, directors and officers must act within their ______________ authority and within the ______________ of the corporation. They must also exercise ______________. Here, the directors of Urban Credit did not disregard their duties or act in bad faith.