Question 1

The Sarbanes-Oxley Act,passed by the U.S.Congress in July 2002,was designed to:

Accepted Answer

A)   reinstitute heavy tariffs on international trade.
B)   reform corporate governance.
C)   limit the Federal Reserve Board's ability to engage in the buying and selling of gold.
D)   limit trade with countries deemed lenient on terrorism. B

Question 2

The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.

Accepted Answer

A) True 
 B)False

Question 3

State Owned Enterprises (SOEs)by their very name cannot be traded on stock exchanges because they are government owned.

Accepted Answer

A) True 
 B)False

Question 4

The stakeholder capitalism model:

Accepted Answer

A)   typically avoids the flaw of impatient capital.
B)   tries to meet the desires of multiple stakeholders.
C)   may leave management without a clear signal about tradeoffs among the several stakeholders.
D)   all of the above D

Question 5

Privatization is a term used to describe:

Accepted Answer

A)   firms that are purchased by the government.
B)   government operations that are purchased by corporations and other investors.
C)   firms that do not use publicly available debt.
D)   non-public meetings held by members of interlocking directorates.

Question 6

Signed into law on July 30,2002,the ________ Act requires CEOs of publicly traded companies to vouch for the veracity of the firm's published financial statements.

Accepted Answer

A)   Smoot-Hawley
B)   Humphrey-Hawkins
C)   McCain-Merrill
D)   Sarbanes-Oxley

Question 7

Which of the following broad topics is NOT identified as an area to be established as good corporate governance practice by the Organization for Economic Cooperation and Development (OECD) ?

Accepted Answer

A)   protect the rights of shareholders
B)   disclosure and transparency
C)   the proper role of stakeholders in the governance of the firm
D)   All of the above should be a concern of good corporate governance.

Question 8

Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?

Accepted Answer

A)   the use of stock options to align the goals of shareholders and managers
B)   the market for corporate control that allows for outside takeover of the firm
C)   performance based compensation for executive management
D)   all of the above

Question 9

Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms.Which of the following is NOT identified by the authors as typical controlling shareholders?

Accepted Answer

A)   the government (for example, privatized utilities) 
B)   institutions (such as banks in Germany) 
C)   family (such as in France) 
D)   All of the above were identified by the authors as controlling shareholders.

Question 10

The number of publicly traded firms:

Accepted Answer

A)   peaked in the U.S. in 1996.
B)   peaked worldwide in 1996.
C)   increased significantly in 2009 as a result of the international financial crisis.
D)   all of the above

Question 11

In recent years the trend has been for markets to increasing focus on the global stakeholders.

Accepted Answer

A) True 
 B)False

Question 12

In finance,an efficient market is one in which:

Accepted Answer

A)   prices are assumed to be correct.
B)   prices adjust quickly and accurately to new information.
C)   prices are the best allocators of capital in the macro economy.
D)   all of the above

Question 13

Which of the following is NOT an important concept when distinguishing between international and domestic financial management?

Accepted Answer

A)   corporate governance
B)   culture, history, and institutions
C)   political risk
D)   All of the above are important distinguishing concepts.

Question 14

In the stakeholder capitalism model (SCM)the assumption of market efficiency is absolutely critical.

Accepted Answer

A) True 
 B)False

Question 15

The stakeholder capitalism model does not assume that equity markets are either efficient or inefficient.

Accepted Answer

A) True 
 B)False

Question 16

Investor protection is typically better in countries with codified civil law (the Code Napoleon)than in countries with a legal system based in English common law.

Accepted Answer

A) True 
 B)False

Question 17

Systematic risk can be defined as:

Accepted Answer

A)   the total risk to the firm.
B)   the risk of the individual security.
C)   the risk of the market in general.
D)   the risk that can be systematically diversified away.

Question 18

According to the authors,dual classes of voting stock are the norm in non-Anglo-American markets.

Accepted Answer

A) True 
 B)False  True

Question 19

U.S.listings of publicly traded firms as a percentage of worldwide listings of such firms INCREASED from 11% in 1996 to approximately 33% in 2010.

Accepted Answer

A) True 
 B)False

Question 20

Patient Capitalism is characterized by short-term focus by both management and investors.

Accepted Answer

A) True 
 B)False

Exam 4: Financial Goals and Corporate Governance

The Sarbanes-Oxley Act,passed by the U.S.Congress in July 2002,was designed to:

Correct AnswerverifiedB

The stakeholder capitalism model assumes that only systematic risk "counts" or is a prime concern for management.

Correct AnswerverifiedShow Answer

State Owned Enterprises (SOEs)by their very name cannot be traded on stock exchanges because they are government owned.

Correct AnswerverifiedShow Answer

The stakeholder capitalism model:

Correct AnswerverifiedD

Privatization is a term used to describe:

Correct AnswerverifiedShow Answer

Signed into law on July 30,2002,the ________ Act requires CEOs of publicly traded companies to vouch for the veracity of the firm's published financial statements.

Correct AnswerverifiedShow Answer

Which of the following broad topics is NOT identified as an area to be established as good corporate governance practice by the Organization for Economic Cooperation and Development (OECD) ?

Correct AnswerverifiedShow Answer

Which of the following is a reason why managers act to maximize shareholder wealth in Anglo-American markets?

Correct AnswerverifiedShow Answer

Foreign stock markets are frequently characterized by controlling shareholders for the individual publicly traded firms.Which of the following is NOT identified by the authors as typical controlling shareholders?

Correct AnswerverifiedShow Answer

The number of publicly traded firms:

Correct AnswerverifiedShow Answer

In recent years the trend has been for markets to increasing focus on the global stakeholders.

Correct AnswerverifiedShow Answer

In finance,an efficient market is one in which:

Correct AnswerverifiedShow Answer

Which of the following is NOT an important concept when distinguishing between international and domestic financial management?

Correct AnswerverifiedShow Answer

In the stakeholder capitalism model (SCM)the assumption of market efficiency is absolutely critical.

Correct AnswerverifiedShow Answer

The stakeholder capitalism model does not assume that equity markets are either efficient or inefficient.

Correct AnswerverifiedShow Answer

Investor protection is typically better in countries with codified civil law (the Code Napoleon)than in countries with a legal system based in English common law.

Correct AnswerverifiedShow Answer

Systematic risk can be defined as:

Correct AnswerverifiedShow Answer

According to the authors,dual classes of voting stock are the norm in non-Anglo-American markets.

Correct AnswerverifiedTrue

U.S.listings of publicly traded firms as a percentage of worldwide listings of such firms INCREASED from 11% in 1996 to approximately 33% in 2010.

Correct AnswerverifiedShow Answer

Patient Capitalism is characterized by short-term focus by both management and investors.

Correct AnswerverifiedShow Answer

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B

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True

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