Business and society Chapter 14 – Flashcards
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Which of the following statements is not true about stockholders?
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They own equal shares of company assets.
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Which of the following is not true about institutional investors?
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The proportion of institutional ownership of stock is the U.S. has declined slowly since the 1960's.
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Institutional investors are sometimes referred to as:
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Wall Street investors
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Investors may receive an economic benefit from the ownership of stock by receiving:
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Dividends and capital gains Both B and C, but not A
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In 2008 and early 2009, share values decline sharply as the global economy fell into a severe recession. This type of stock market is referred to as a:
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Bear market
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Which of the following is not a legal rights of stockholders?
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To vote on who will become CEO
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The directors of a company are a central factor in corporate governance because they:
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Exercise warm or legal authority over company policy
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The Paramount duty of the Board of director of a public corporation is to:
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Select an oversea competent and ethical management to run the company
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Which of the following is true about corporate boards?
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Corporate boards average 12 members.
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Which of the following is not a function of corporate committees?
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The Finance Committee works slowly with a human resource department to fund employee salaries
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The Audit Committee is required by U.S. law to be:
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Composed entirely of outside directors and Financially literate A and B, but not C
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How are directors (members of corporate boards) selective?
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Shareholders elect the directors from a list of candidate.
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Which of the following is a key feature of it effective boards of directors?
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Hold regular meetings without the CEO present.
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The "agency problem" arises when:
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Managers act in their own interests, rather than in the interest of shareholders.
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The main reason that American executives are paid so much is:
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Pay is set by the Compensation Committee of the board, largely comprised of other CEOs who have an interest in pushing compensation up
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Which of the following arguments opposes the idea of high executive pay?
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High salaries divert resources that could be used to invest in the business
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Which of the following is not an argument for height executive compensation?
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Inflated executive pay helps U.S. firms compete with foreign rivals
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The activism of industrial investors in other countries has been spearheaded by:
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U.S.-based pensions and mutual funds that in recent years acquired large stakes in foreign countries
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Social investors seek to eliminate from their investment portfolios companies that:
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Pollute the environment, Discriminate against employees, Make dangerous products like tobacco or weapons All of the above
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Which of the following is not an example of for filling social objectives through stock ownership?
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Selling stock of companies with a below market rate of return.
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The mission of the Securities and Exchange Commission (SEC) is to:
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Protect shareholders rights by making sure that stock markets are run fairly.
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Reports filed with the SEC provide informational on the company's:
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Sales and earnings, depreciation by line of business, details of foreign operations All of the above
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In response to concerns about the lack of transparency and financial accounting, Congress passed a new law called the:
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Sarbanes-Oxley Act
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The Securities and Exchange Commission outlaws:
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Any manipulative or deceptive device used to trade stocks
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Which of the following is not an instance of insider trade?
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A marketing executive briefing stock analysis on the companies sell performance
