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BTF Chapter 11 : Governance and ethics
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  • Question 1
    120 seconds
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    Q.

    Which three of the following attributes are identified by the Institute of Business Ethics as being typical of ethical business leaders?

    answer choices

    Fair mindedness

    Honesty

    Ability to listen

    Empathy

    Accountability

  • Question 2
    120 seconds
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    Q.

    In a market-based financial system, the financial system will be characterised by

    answer choices

    comparatively more government regulation than a bank-based system

    comparatively less close relationships between banks and businesses than in a bank-based system

    comparatively more risk averse households than in a bank-based system

    households with less access to investment in physical assets than in a bank-based system

  • Question 3
    120 seconds
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    Q.

    In the country of Zanadu, the population has a risk seeking attitude towards financial matters. Zanadu's financial system is likely to be

    answer choices

    a market-based system

    a stakeholder system

    a bank-based system

    a public policy system

  • Question 4
    120 seconds
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    Q.

    Under a unitary board structure, a company's board of directors is responsible for both management of the business and reporting to

    answer choices

    the non-executive directors

    the supervisory board

    the company's employees

    the company's shareholders

  • Question 5
    120 seconds
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    Q.

    In both bank-based and market-based financial systems, financial intermediation is of increased importance because of its ability to address the market imperfection of

    answer choices

    monopoly

    asymmetric information

    trade barriers

    tariffs and quotas

  • Question 6
    120 seconds
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    Q.

    The agency problem is behind the need for sound corporate governance. The 'principal' in this agency relationship is

    answer choices

    customers as a body

    shareholders as a body

    managers as a body

    directors as a body

  • Question 7
    120 seconds
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    Q.

    A consultant has made the following statements, which he maintains are drawn from the definition of corporate governance in the OECD's Principles of Corporate Governance.


    Statement 1

    Corporate governance comprises the practices and procedures for ensuring that a company is run in such a way that it achieves its objectives


    Statement 2 Corporate governance is a set of relationships between a company's management, its board, its shareholders and other stakeholders


    Do these statements match the definition?

    answer choices

    Statement 1: Yes, matches. Statement 2 : No, does not match

    Statement 1: No, does not match Statement 2: Yes, matches

    Statement 1: Yes, matches Statement 2: Yes, matches

    Statement 1: No, does not match Statement 2 : No, does not match

  • Question 8
    120 seconds
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    Q.

    Different corporate governance systems reflect different ways in which companies are managed and controlled by different board structures. The following statements have been made about the structure of a board of directors.


    Statement 1 In the UK and Germany there is a unitary board system


    Statement 2 A two-tier system comprises a management board and a supervisory board


    Are these statements true or false?

    answer choices

    Statement 1 True , Statement 2 False

    Statement 1 False , Statement 2 True

    Statement 1True , Statement 2 True

    Statement 1False , Statement 2 False

  • Question 9
    120 seconds
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    Q.

    Which of the following is one of the five OECD Principles of Corporate Governance?

    answer choices

    Promote transparent and fair financial reporting

    Support the rights of stakeholders

    Treat major shareholders equitably

    Ensure real time, accurate disclosure and transparency

  • Question 10
    120 seconds
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    Q.

    The following statements have been made about ethical audits and corporate responsibility.


    Statement 1 An ethical audit is a process which measures both the internal and external consistency of a company's values base


    Statement 2 How far an organisation protects stakeholders with which it has contractual relationships is a measure of its corporate responsibility


    Are these statements true or false?

    answer choices

    Statement 1 True Statement 2 False

    Statement 1 False Statement 2 True

    Statement 1 True Statement 2 True

    Statement 1 False Statement 2 False

  • Question 11
    120 seconds
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    Q.

    The principal factor affecting the nature of business ethics over time is

    answer choices

    the expectations of society

    the values of senior management

    company policies

    government regulation

  • Question 12
    120 seconds
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    Q.

    A financial system comprises which three of the following?

    answer choices

    Governance structures

    Intermediaries

    Securities

    Markets

    Regulators

  • Question 13
    120 seconds
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    Q.

    The ability of markets to allocate resources efficiently within a financial system is often restricted by market imperfections.


    Which three of the following are market imperfections associated with financial markets?

    answer choices

    Lack of codes of practice

    Information asymmetry

    Transaction costs

    Lack of regulation

    Insider dealing

  • Question 14
    120 seconds
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    Q.

    The body responsible for promoting high standards of corporate governance in the UK is the

    answer choices

    FRC

    OECD

    CCAB

    Bank of England

  • Question 15
    120 seconds
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    Q.

    Woolmer plc adopts corporate responsibility as a key element in its strategies. This will mean that the company seeks to

    answer choices

    meet the minimum obligations it owes to stakeholders

    exceed the minimum obligations it owes to stakeholders

    meet the minimum obligations it owes to shareholders

    exceed the minimum obligations it owes to shareholders

  • Question 16
    120 seconds
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    Q.

    In seeking to address the problem of the separation of ownership and control, corporate governance attempts to align the interests of which two of the following stakeholders?

    answer choices

    Investors

    Employees

    Regulators

    Managers

    Auditors

  • Question 17
    120 seconds
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    Q.

    The stewardship approach to corporate governance requires directors of limited companies

    answer choices

    to act at all times in the best interests of the company

    to allow shareholders to see detailed accounting records on request

    to hold regular monthly meetings to answer shareholders' questions

    to consult the shareholders over difficult management decisions

  • Question 18
    120 seconds
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    Q.

    The board of directors of Lake plc is concerned that the current Chief Executive's actions are undermining the ethical culture at the company. She fails to listen to the concerns of managers about unfair treatment of suppliers, and she has failed to learn from a recent scandal in which the company was fined for data protection breaches.


    To improve the ethical culture at Lake plc, which of the following is the most important action for the board to take?

    answer choices

    Draft a code of business ethics for Lake plc's employees

    Rewrite Lake plc's policies regarding suppliers and customers

    Demonstrate leadership by encouraging Lake plc's Chief Executive to be more open

    Brief shareholders more fully about Lake plc's incentive scheme for managers

  • Question 19
    120 seconds
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    Q.

    Protea plc manufactures sporting equipment for leisure centres. The Chairman is Jonathan Potter, and the Chief Executive is his daughter Elise. All of the directors receive bonuses based on annual profits. The company's sales are made by individual salespeople who routinely bypass the company's strict credit check procedures. A number of irrecoverable debts have arisen in the current year that would have affected profitability and the share price, if the Finance Director had not manipulated the accounts.


    From this information, what are the likely corporate governance issues at Protea plc?

    answer choices

    Domination by a small group

    Emphasis on short-term profitability

    Lack of supervision of employees

    All of the above

  • Question 20
    120 seconds
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    Q.

    Which of the following is a list of the key elements of good corporate governance?

    answer choices

    Board of directors, senior management, employees, external auditors, external auditors

    Senior management, shareholder, employee, external auditors, lenders

    Board of directors, senior management, shareholders, external auditors, internal auditors

    Senior management, stakeholder, internal auditors, employees, government regulators

  • Question 21
    120 seconds
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    Q.

    Ultra Zeta AG is a company based in Germany. The business has a dual board structure for its Board of Directors

    Which of the following types of board forms part of the company's board structure?

    answer choices

    Unitary board

    Supervisory board

    Non-executive board

    Executive board

  • Question 22
    120 seconds
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    Q.

    The national culture in the country of Erewhon is characterised by a high ‘power distance’ score, and an acceptance that power is distributed unequally, and concentrated in the hands of a small number of key individuals.


    By contrast, the country of Wenland has a lower ‘power distance’ score, and people strive to get power distributed more evenly.


    Based on the ‘power distance’ scores of the two countries, identify if each of the following statements is likely to be true or false.


    1 The corporate governance code in Erewhon prohibits the role of CEO and chair being combined, but the code in Wenland permits this.

    2 The corporate governance code in Wenland requires a higher proportion of independent NEDs on the board than the code in Erewhon does.

    answer choices

    Statement 1 = True; Statement 2 = True

    Statement 1 = True; Statement 2 = False

    Statement 1 = False; Statement 2 = True

    Statement 1 = False; Statement 2 = False

  • Question 23
    120 seconds
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    Q.

    Which of the following statements about whistle-blowing is/are true?


    1 Whistle-blowing involves the disclosure by an employee of illegal or unethical behaviour in the workplace.

    2 Employees should always report concerns about unethical behaviour to their line manager in the first instance.

    answer choices

    Neither of them

    1 only

    2 only

    Both of them

  • Question 24
    120 seconds
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    Q.

    Which three of the following are core aspects of South Africa’s King Report?

    answer choices

    Good corporate citizenship

    Equality

    Leadership

    Sustainability

    Responsibility

  • Question 25
    120 seconds
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    Q.

    Goldenwood plc is a multinational company that makes sweets and sugary drinks targeted at children between the ages of 4 and 8 years old. The company regularly advertises its products during prime time children’s television programmes and on popular YouTube channels with high numbers of child subscribers. In recent weeks, the company has received adverse publicity because of its targeting of young children which has been branded as ‘unethical’.


    Which business function is impacted by this ethical issue?

    answer choices

    Operations

    Procurement

    Human Resources

    Marketing

  • Question 26
    120 seconds
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    Q.

    The agency problem concerns the misalignment in interests and conflicts of interest between:

    answer choices

    banks and financial markets

    regulators and professional bodies

    government and industry

    directors and shareholders

  • Question 27
    120 seconds
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    Q.

    In a company with weak corporate governance managers may be able primarily to pursue their own rather than the company's interests because, in relation to shareholders:

    answer choices

    they have more information and high levels of accountability

    they have less information and high levels of accountability

    they have more information and low levels of accountability

    they have less information and low levels of accountability

  • Question 28
    120 seconds
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    Q.

    In comparison with the corporate and the public policy perspectives on corporate governance, the stakeholder perspective places least emphasis on:

    answer choices

    accountability

    alignment of interests of shareholders and other stakeholders

    good information

    efficient use of resources

  • Question 29
    120 seconds
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    Q.

    Good practice in corporate governance requires that openness and transparency should be supported by:

    answer choices

    reducing the potential for conflicts of interest

    disclosure of information

    reconciling the interests of shareholders and directors

    judging performance of directors on the basis of return on investment

  • Question 30
    120 seconds
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    Q.

    In countries with a dual board structure, the supervisory board is elected by:

    answer choices

    shareholders only

    employees only

    shareholders and employees only

    shareholders, employees and members of the management board

  • Question 31
    120 seconds
    Report an issue
    Q.

    Business ethics are primarily moulded by the expectations of:

    answer choices

    directors

    customers

    government

    society

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