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| 1 | |
The overall control of the activities of a corporation is known as: |
| | A) | corporate governance. |
| | B) | corporate charter. |
| | C) | CalPERS. |
| | D) | industrial capitalism. |
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| 2 | |
The legal authority of corporate managers and directors to function in conformity to corporate governance is known as: |
| | A) | the CalPERS guidelines. |
| | B) | the corporate charter. |
| | C) | the corporate veil. |
| | D) | ultra vires. |
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| 3 | |
Corporate charters are also known as: |
| | A) | precautionary principles. |
| | B) | yellow dog contracts. |
| | C) | employment contracts. |
| | D) | articles of incorporation. |
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| 4 | |
The legal line of power in state charters and incorporation laws runs from: |
| | A) | the state, to shareholders, to directors, to managers. |
| | B) | the shareholders, to managers, to directors, to the state. |
| | C) | the managers, to directors, to shareholders, to the state. |
| | D) | the directors, to managers, to the state, to shareholders. |
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| 5 | |
This is a federal statute designed to prevent financial fraud which enacted new regulations on auditing, financial reporting, and legal compliance. |
| | A) | The Brady Bill of 1993 |
| | B) | The Helms-Burton Act of 1996 |
| | C) | The Sarbanes-Oxley Act of 2002 |
| | D) | The McCain–Feingold Act of 2002 |
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| 6 | |
All of the following are provisions of the Sarbanes-Oxley Act EXCEPT: |
| | A) | it prescribes rules to improve auditing. |
| | B) | it mandates a system run by the shareholders to protect whistleblowers. |
| | C) | it prohibits corporate executives from receiving loans unavailable to outsiders. |
| | D) | it requires the CEO and the CFO to sign and certify the accuracy of annual and quarterly financial statements. |
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| 7 | |
On a Board of Directors, managers of the corporation who sit on the Board are called _____ directors, while Board members who do not work for the corporation are called _____ directors. |
| | A) | outside; inside |
| | B) | inside; outside |
| | C) | lateral; independent |
| | D) | independent; inside |
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| 8 | |
Corporate boards of directors should perform all of the following specific functions EXCEPT: |
| | A) | review the strategies and plans of the corporation. |
| | B) | give advice and counsel to management. |
| | C) | select the CEO. |
| | D) | make day-to-day management decisions. |
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| 9 | |
The primary purpose of the board of directors is to: |
| | A) | safeguard the shareholders by maintaining detached, impartial oversight on management. |
| | B) | nominate candidates to be presented to the stockholders for election as directors. |
| | C) | create governance policies for the firm, including compensation policies. |
| | D) | select the CEO, evaluate his/her performance, and remove the CEO if necessary. |
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| 10 | |
An independent director who chairs regular meetings of the independent board majority without the CEO and other inside directors being present is known as a(n): |
| | A) | lead director. |
| | B) | shadow director. |
| | C) | full-time executive director. |
| | D) | alternate director. |
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| 11 | |
Institutional investors are: |
| | A) | groups that represent the political interests of many companies and industries. |
| | B) | domestic businesses which feel pressures from foreign competitors with better products and lower prices. |
| | C) | members of left-leaning groups who advocate more radical corporate reforms than did the old Progressives. |
| | D) | organizations that buy shares in publicly traded corporations. |
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| 12 | |
The CalPERS fund has identified a list of about 10 companies in its portfolio whose shares are underperforming market indexes. This is called: |
| | A) | the proxy statement. |
| | B) | the focus list. |
| | C) | performance shares. |
| | D) | restricted stock. |
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| 13 | |
The right to purchase a specified number of shares of a company's stock for a specified price at a future date is called a: |
| | A) | stock bid. |
| | B) | stock option. |
| | C) | stock grant. |
| | D) | stock right. |
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| 14 | |
Restricted stock: |
| | A) | is the right to purchase a specified number of shares of a company's stock for a specified price at a future date. |
| | B) | is a stock that makes a huge part of the investor's wealth depending upon the performance of a particular stock. |
| | C) | is a grant of shares of company stock awarded after a fixed period of years only if individual performance goals are met. |
| | D) | is a grant of stock with restrictions on transaction that are removed when a specified condition is met. |
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| 15 | |
This cannot be sold until certain conditions are met, most often the lapse of a time period or meeting a performance goal. |
| | A) | Performance shares |
| | B) | Restricted stock |
| | C) | Proxy statement |
| | D) | Perquisites |
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| 16 | |
_____ is criticized for giving executives unearned rewards and illegal when concealed from shareholders. |
| | A) | Snowballing |
| | B) | Whistleblowing |
| | C) | Backdating |
| | D) | Spring loading |
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| 17 | |
Spring loading is: |
| | A) | the granting of options shortly before the release of good news, already known to the company but not yet to the public, which causes share prices to rise. |
| | B) | setting the exercise price of stock options at the price on a date before the date they were granted. |
| | C) | a document sent to shareholders before the annual meeting which sets forth matters requiring their vote. |
| | D) | a grant of stock with restrictions on transaction that are removed when a specified condition is met. |
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| 18 | |
_____ occurs when a company, at the time of the grant or retroactively, changes the exercise price back to a date when the price of the stock was lower. |
| | A) | Backdating |
| | B) | Whistleblowing |
| | C) | Snowballing |
| | D) | Spring loading |
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| 19 | |
Setting the exercise price of stock options at the price on a date before the date they were granted is termed as: |
| | A) | mapping. |
| | B) | spring loading. |
| | C) | backdating. |
| | D) | cause-related marketing. |
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| 20 | |
Which of the following is not a suggested compensation reform? |
| | A) | The SEC should require more data on compensation in reports to shareholders. |
| | B) | Pay and performance relationships should be revealed. |
| | C) | Bonuses should be tied to short-term performance. |
| | D) | Shareholders should be able to vote on executive compensation. |
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