Question 1

Which of the following is not a function of board committees?

Accepted Answer

A)   The executive committee works closely with top managers on business matters.
B)   The audit committee reviews the company's financial reports.
C)   The compensation committee administers and approves salaries and benefits.
D)   The finance committee works closely with the human resources department to fund employee salaries.E) None of the above
F) B) and C)

Question 2

The Securities and Exchange Commission outlaws:

Accepted Answer

A)   Any manipulative or deceptive device used to trade stocks.
B)   Compensating company executives with stock options.
C)   Trading in stocks by institutions.
D)   Buying stock in a company for which you work.E) C) and D)
F) None of the above

Question 3

The mission of the Securities and Exchange Commission (SEC)  is to:

Accepted Answer

A)   Protect shareholders' rights by making sure that stock markets are run fairly.
B)   Protect companies from hostile takeovers.
C)   Ensuring that institutional investors do not take control of company management.
D)   Ensuring that the federal treasury receives its share of the revenues from stock trading.E) A) and B)
F) All of the above

Question 4

Institutional investors have little incentive to hold their shares and organize to change management policy.

Accepted Answer

A) True 
 B)False

Question 5

Between 2002 and 2004, the proportion of global companies that formally evaluated their board members:

Accepted Answer

A)   Decreased from 90 to 35 percent.
B)   Increased from 35 to 90 percent.
C)   Remained constant for all industries.
D)   None of the above.E) A) and C)
F) C) and D)

Question 6

Institutional investors are sometimes referred to as:

Accepted Answer

A)   Main Street investors.
B)   Wall Street investors.
C)   Inside investors.
D)   Outside investors.E) B) and C)
F) All of the above

Question 7

The board committee that administers and approves salaries and benefits of high-level managers in a company is called the:

Accepted Answer

A)   Executive committee.
B)   Human resources committee.
C)   Nominating committee.
D)   Compensation committee.E) B) and C)
F) None of the above

Question 8

Reports filed with the SEC provide information on a company's:

Accepted Answer

A)   Sales and earnings.
B)   Depreciation by line of business.
C)   Details of foreign operations.
D)   All of the above.E) None of the above
F) A) and B)

Question 9

The Organization for Economic Cooperation and Development (OECD), representing 30 nations, issued a revised set of principles of corporate governance in 2004 to serve as a benchmark for companies and policymakers worldwide.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a key feature of effective boards of directors?

Accepted Answer

A)   Hold regular meetings without the CEO present.
B)   Fill all important positions on the board with managers with insider knowledge of the firm.
C)   Combine the duties of the board chairman and the chief executive.
D)   Ensure that no outside members are included on the board.E) A) and C)
F) A) and B)

Question 11

Since the 1960s, there has been phenomenal growth in the numbers of institutional investors in the United States.

Accepted Answer

A) True 
 B)False

Question 12

Corporate governance involves the exercise of control over a company's:

Accepted Answer

A)   Finance and accounting departments.
B)   Entire operations.
C)   Manufacturing facilities.
D)   Marketing and human resources departments.E) A) and C)
F) C) and D)

Question 13

Shareholders must rely exclusively on the board of directors.

Accepted Answer

A) True 
 B)False

Question 14

The paramount duty of the board of directors of a public corporation is to:

Accepted Answer

A)   Ensure the company is profitable.
B)   Select and oversee competent and ethical management to run the company.
C)   Audit the firm's financial statements for transparency.
D)   Make certain that employees are dealt with in a fair and equitable manner.E) All of the above
F) A) and D)

Question 15

Investors always choose to invest in the stock of companies that pay high dividends.

Accepted Answer

A) True 
 B)False

Question 16

The activism of institutional investors in other countries has been spearheaded by:

Accepted Answer

A)   U.S.-based pension and mutual funds that in recent years acquired large stakes in foreign countries.
B)   Foreign institutions that were granted new rights by their governments.
C)   Managers who have become active in proxy battles in the Netherlands, Austria, and Hong Kong.
D)   The rising number of individual investors of public service companies.E) B) and D)
F) None of the above

Question 17

It is the responsibility of the board of directors and its audit committee to engage an independent accounting firm to audit the financial statements prepared by management.

Accepted Answer

A) True 
 B)False

Question 18

In your opinion, how is the relationship between the modern corporation and shareholders changing? Explain and justify your argument.

Accepted Answer

The relationship between the modern corp...

Question 19

Which of the following is not an instance of "insider trading"?

Accepted Answer

A)   An auditor using nonpublic information about the company to invest in its stock.
B)   A marketing executive briefing stock analysts on the company's sales performance.
C)   The CEO's cousin buying stock after the CEO mentioned a pending offer to buy the company.
D)   A stock broker passing an "inside tip" to a client, but not trading for his or her own account.E) None of the above
F) C) and D)

Question 20

Stock options represent the right to buy a company's stock at a set price for a certain period.

Accepted Answer

A) True 
 B)False

Exam 14: Stockholder Rights and Corporate Governance

The paramount duty of the board of directors of a public corporation is to:

Correct AnswerverifiedShow Answer

Between 2002 and 2004, the proportion of global companies that formally evaluated their board members:

Correct AnswerverifiedShow Answer

Since the 1960s, there has been phenomenal growth in the numbers of institutional investors in the United States.

Correct AnswerverifiedShow Answer

The mission of the Securities and Exchange Commission (SEC) is to:

Correct AnswerverifiedShow Answer

Reports filed with the SEC provide information on a company's:

Correct AnswerverifiedShow Answer

Institutional investors are sometimes referred to as:

Correct AnswerverifiedShow Answer

The activism of institutional investors in other countries has been spearheaded by:

Correct AnswerverifiedShow Answer

The Securities and Exchange Commission outlaws:

Correct AnswerverifiedShow Answer

Investors always choose to invest in the stock of companies that pay high dividends.

Correct AnswerverifiedShow Answer

The Organization for Economic Cooperation and Development (OECD), representing 30 nations, issued a revised set of principles of corporate governance in 2004 to serve as a benchmark for companies and policymakers worldwide.

Correct AnswerverifiedShow Answer

Which of the following is a key feature of effective boards of directors?

Correct AnswerverifiedShow Answer

Stock options represent the right to buy a company's stock at a set price for a certain period.

Correct AnswerverifiedShow Answer

Which of the following is not a function of board committees?

Correct AnswerverifiedShow Answer

It is the responsibility of the board of directors and its audit committee to engage an independent accounting firm to audit the financial statements prepared by management.

Correct AnswerverifiedShow Answer

Which of the following is not an instance of "insider trading"?

Correct AnswerverifiedShow Answer

Corporate governance involves the exercise of control over a company's:

Correct AnswerverifiedShow Answer

Shareholders must rely exclusively on the board of directors.

Correct AnswerverifiedShow Answer

Institutional investors have little incentive to hold their shares and organize to change management policy.

Correct AnswerverifiedShow Answer

In your opinion, how is the relationship between the modern corporation and shareholders changing? Explain and justify your argument.

Correct AnswerAnswered by ExamLex AIThe relationship between the modern corp...View AnswerShow Answer

The board committee that administers and approves salaries and benefits of high-level managers in a company is called the:

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Answered by ExamLex AI
The relationship between the modern corp...
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