1.

Which group of company stakeholders would be least affected if the firm’s financial

position weakens?

A. Suppliers

B. Customers

C. Managers and employees

2. Which of the following represents a principal-agent conflict between shareholders

and management?

A. Risk tolerance

B. Multiple share classes

C. Accounting and reporting practices

3. Which of the following statements regarding stakeholder management is most

accurate?

A. Company management ensures compliance with all applicable laws and

regulations.

B. Directors are excluded from voting on transactions in which they hold

material interest.

C. The use of variable incentive plans in executive remuneration is decreasing.

4. Which of the following issues discussed at a shareholders’ general meeting would

most likely require only a simple majority vote for approval?

A. Voting on a merger

B. Election of directors

C. Amendments to bylaws

5. Which of the following statements about environmental, social, and governance

(ESG) in investment analysis is correct?

A. ESG factors are strictly intangible in nature.

B. ESG terminology is easily distinguishable among investors.

C. Environmental and social factors have been adopted in investment analysis

more slowly than governance factors.

6. The existence of “stranded assets” is a specific concern among investors of:

A. energy companies.

B. health care companies.

C. property companies.

7. An investor concerned about clean-up costs resulting from breaches in a publicly

traded company’s safety standards would most likely consider which factors in

her investment analysis?

A. Social factors

B. Governance factors

C. Environmental factors

8. _______ investing is the umbrella term used to describe investment strategies

that incorporate environmental, social, and governance (ESG) factors into their

approaches.

A. ESG

B. Sustainable

C. Responsible

9. An investor concerned about a publicly traded company’s data privacy and

security practices would most likely incorporate which type of ESG factors in an

investment analysis?

A. Social

B. Governance

C. Environmental

10. Which of the following statements regarding ESG investment approaches is most

accurate?

A. Negative screening excludes industries and companies that do not meet the

investor’s ESG criteria.

B. Thematic investing considers multiple factors.

C. Positive screening excludes industries with unfavorable ESG aspects.

11. Which of the following stakeholders are least likely to be positively affected by

increasing the proportion of debt in the capital structure?

A. Senior management

B. Non-management employees

C. Shareholders

12. Which statement correctly describes corporate governance?

A. Corporate governance complies with a set of global standards.

B. Corporate governance is independent of both shareholder theory and stakeholder

theory.

C. Corporate governance seeks to minimize and manage conflicting interests

between insiders and external shareholders.

13. Which of the following represents a responsibility of a company’s board of direc-

tors?

A. Implementation of strategy

B. Enterprise risk management

C. Considering the interests of shareholders only

14. Which of the following statements concerning the legal environment and shareholder

protection is most accurate?

A. A civil law system offers better protection of shareholder interests than does

a common law system.

B. A common law system offers better protection of shareholder interests than

does a civil law system.

C. Neither system offers an advantage over the other in the protection of shareholder

interests.