Which of the following statements is not true about stockholders? |
They own equal shares of company assets. |
Which of the following is not true about institutional investors? |
The proportion of institutional ownership of stock in the U.S. has declined slowly since the 1960s. |
Institutional investors are sometimes referred to as: |
Wall Street investors. |
In 2008 and early 2009, share values declined sharply as the global economy fell into a severe recession. This type of stock market is referred to as a: |
Bear market. |
Which if the following is not a legal right of stockholders? |
To vote on who will become chief executive officer (CEO). |
Corporate governance involves the exercise of control over a company’s: |
Entire operations. |
The directors of a company are a central factor in corporate governance because they: |
Exercise formal legal authority over company policy. |
The paramount duty of the board of directors of a public corporation is to: |
Select and oversee competent and ethical management to run the company. |
Which of the following is true about corporate boards? |
Corporate boards average 12 members. |
In 2010, median compensation for directors at the largest U.S. corporations was (rounded to the nearest $10): |
$212,510. |
The board committee that administers and approves salaries and benefits of high-level managers in a company is called the: |
Compensation committee. |
Which of the following is not a function of board committees? |
The finance committee works closely with the human resources department to fund employee salaries. |
How are directors (members of corporate boards) selected? |
Shareholders elect the directors from a list of candidates. |
Which of the following is a key feature of effective boards of directors? |
Hold regular meetings without the CEO present. |
By 2010, out of the 100 largest US companies, how many had separated the positions of CEO and board chairman? |
Thirty-one. |
The "agency problem" arises when: |
Managers act in their own interest, rather than in the interest of shareholders. |
The main reason that American executives are paid so much is: |
Pay is set by the compensation committees of the board, largely comprised of other CEOs who have an interest in pushing compensation up. |
Which of the following arguments opposes the idea of high executive pay? |
High salaries divert resources that could be used to invest in the business. |
Which of the following is not an argument for high executive compensation? |
Inflated executive pay helps U.S. firms compete with foreign rivals. |
A reason for institutions becoming more assertive in promoting the interests of their member investors is: |
It is difficult for institutions to sell their holdings. |
The activism of institutional investors in other countries has been spearheaded by: |
U.S.-based pension and mutual funds that in recent years acquired large stakes in foreign countries. |
Which of the following is not an example of fulfilling social objectives through stock ownership? |
Selling stock of companies with a below-market rate of return. |
The mission of the Securities and Exchange Commission (SEC) is to: |
Protect shareholders’ rights by making sure that stock markets are run fairly. |
In response to concerns about the lack of transparency in financial accounting, Congress passed a new law called the: |
Sarbanes-Oxley Act. |
The Securities and Exchange Commission outlaws: |
Any manipulative or deceptive device used to trade stocks. |
Which of the following is not an instance of "insider trading"? |
A marketing executive briefing stock analysts on the company’s sales performance. |
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