The Corporate World with Governance, Ethics and Internal Control

Name: Allister Rex O. Camanse

Class Schedule: TTH 11:30-1:00PM

Assessment

I. Multiple Choice

Directions: Read and analyze each item. Encircle the letter of the correct answer. You
may also view this exam on google class. Submit your work in the pigeon boxes which
are provided in your department/college, or to google class on or before the date as
reflected in your study schedule.

1. The risk that refers to uncertainty about the rate of return caused by the nature of the
business is
A. Default risk B. Business risk
C. Liquidity risk D. Financial risk

2. The risk associated with the uncertainty created by the inability to turn investment
quickly for cash
A. Interest rate risk B. Business risk
C. Liquidity risk D. Default risk

3. The risk that the real rate of return will be lesser than the nominal or stated rate of
return due to inflation is referred to as
A. Purchasing power risk B. Liquidity risk
C. Default risk D. Business risk

4. Operations risk is manifested in all of the following except

A. Interest rates volatility B. Process stoppage
C. Technological obsolescence D. Management fraud

5. Financial risks associated with Financial Institution include the following, except
A. Liquidity risks B. Credit risks
C. Market liquidity risks D. Environment risk

6. Non-financial risks associated with Financial Institutions include the following except
A. Derivative risk B. Integrity risk
C. Leadership risk D. Regulatory risk

7. ISO 31000 suggests that once risks have been identified and assessed, techniques
to manage the risks should be applied. These techniques include the following
except
A. Retention B. Sharing
C. Reduction D. Complete disregard

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The Corporate World with Governance, Ethics and Internal Control

8. The technique of eliminating or reducing risk which could mean losing out on the
potential gain is called
A. Risk sharing B. Risk retention
C. Risk avoidance D. Risk reduction

9. __________involves accepting the loss or benefit of gain from a risk when it occurs.
A. Risk avoidance B. Risk reduction
C. Risk sharing D. Risk retention

10. The following are the common risk identification method, except
A. Objective-based risk B. Risk Charting
C. Risk Assessment D. Scenario-based risk

11. The following are the practical consideration in managing and reducing financial risk,
except
A. Improve profitability B. Avoid pitfalls
C. Reduce financial risk D. Avoiding and mitigating risks

12. The following principles will help to avoid flawed financial decision making, except
A. Understand the impact of cash flows
B. Know where the risk lies
C. Consider the impact of financial decisions
D. Avoid strong budgetary control

13. Among are the practical techniques to improve profitability, except

A. Focus decision-making on the most profitable areas.
B. Consider how to increase profitability by managing people
C. Consider how to create lesser value from existing customers and products to
enhance profitability.
D. Manage development and production decisions.

14. Identifying the risk is very significant to the organization, once risks are identified
they can be ranked according to their potential impact and likelihood of them
occurring. Among are significant types of risk catalyst, except
A. Technology B. People
C. External Factors D. Risk assessment

15. The following are the practical guidance on how to control cost, which of the
following is correct?
A. Maintain a balance between cost and sales
B. Use budgets for dynamic financial statements
C. Focus on the small items for expenditures
D. Eliminate waste.

16. The following are some of the practical techniques to improve profitability, except
A. Make sure old products enhance overall profitability.
B. Consider how to increase profitability by managing people

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The Corporate World with Governance, Ethics and Internal Control

C. Set the buying policy

D. Focus decision-making on the most profitable areas.

17. Break -even point means

A. Sales is greater than cost B. Sales is less than cost
C. When sales cover cost D. The entity gain profit or incur loss

18. Common causes of variances are the following, except

A. Inefficiency B. Poor communication
C. Poor or flawed planning D. Effective controls

19. To reduce financial risk positive replies to the following questions would assist top
management to manage financial risk, except
A. Is there a positive attitude to budgets and budgeting?
B. What are the least profitable parts of the organizations? How will they
improve?
C. Are the most effective and relevant performance measures in place to
monitor and assess the effectiveness of financial decisions?
D. How can effectiveness of marketing activities be increased?

20. The following are the consideration about financial decisions and explain how to
improved profitability except
A. Variance analysis
B. Break-even analysis
C. Profit control
D. Assessment of market entry and exit barriers

21. It is an active tool to help make financial decisions, not merely a way to measure
performance
A. Budget B. Break -even analysis
C. Variance analysis D. Probability analysis

22. Managers have financial responsibilities and their decisions will often be influenced
by or have an impact on other parts of the business. The following are the principles
that will help to avoid flawed financial decision-making, except
A. Know where the risk lies
B. Financial expertise must be widely available
C. Understand the impact of cash flows
D. Manage development and production decisions.

23. Which of the following is not a source of risk?

A. Functional risk B. Environmental risk
C. Political risk D. Technology risk

24. Which of the following statements best describe risk?

A. Uncertainty when looking at the past
B. Certainty of not suffering harm or loss

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The Corporate World with Governance, Ethics and Internal Control

C. Clarity in future decisions

D. Uncertainty when looking to the future

25. What is risk?

A. Negative consequence that could occur
B. Negative consequence that will occur
C. Negative consequence that must occur
D. Negative consequence that shall not occur

II. True or False

Directions: Read the following sentences. Write the letter “T” if the statement is True
and “F” if the statement is False. Write your answer on the space before the number.
You may also view this test at our google class.

F 1. Risk management performance must be monitored once a year and

organization must be ready to innovate their approaches to be in line with the changing
lines.
T 2. The firm's sales are not guaranteed and will fluctuate as the economy fluctuates
or the nature or the industry changes.
T 3. Business risk is related to sales volatility as well as to the operating leverage
of the firm caused by fixed operating expenses.
T 4. Decisions made by a firm’s management and board of directors materially
affect the risk faced by investors.
T 5. Inflation erodes the purchasing power of the peso and increases investor risk.
F 6. Not entering a business to avoid the risk of loss also avoids the possibility of
getting loss.
T 7. Optimizing risks means finding a balance between the negative' risk and the
benefit of the operation or activity and between risk reduction and effort applied.
T 8. The Board is responsible for defining the company’s level of risk tolerance and
providing oversight over its risk management policies and procedures.
T 9. Business risk is also manifested in business interruptions and regulatory
change

T 10. The levels of risk faced by business firms have increased because of the fast-
growing sophistication of organization, globalization, modern technology and impact of
corporate scandals.
F 11. Risks that lead to frequent losses, such as an increasing incidence of
employee-related problems or difficulties with suppliers, can often be solved using
present experience.

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The Corporate World with Governance, Ethics and Internal Control

T 12. Getting the best value means achieving a balance between the price paid and
the quality received.

T 13. The break-even will result neither a profit nor a loss is made.

F 14. To reduce the chances of things going wrong, focus on the quantity of what
people do - doing the right things right reduces risks and costs.
T 15. It is more difficult to assess the risks inherent in a business decision than to
identify them.
T 16. Management information system must reach the right people at the right time
so that they can investigate and take corrective actions.
T 17. Successful businessmen and decision-makers make sure that the risks
resulting from their decisions are measured, understood and as far as possible
eliminated.
F 18. Avoiding a risk may mean avoiding potentially big opportunity.
F 19. Adequate assurance is one of the typical areas of organizational risk

T 20. Risk management procedures and technique be well documented, clearly

communicated, regularly review monitored.

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or have difficulty in accomplishing the activity, please
send me a message to our google class or you may
ask clarifications through a text message or phone
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ready to take Unit 4.

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