A technique by which a group attempts to generate ideas or find solution for a specific problem. BRAIN STORMING A type of decision tree where you calculate the value of decision based on risk event probability. EMV Accepting the consequences when the risk occurs. RISK ACCEPTANCE According to Ambrooze Bierce, it is an ingenious way of obtaining profit without individual responsibility CORPORATION Advisor to management RESPONSIBILITY OF CFO/CEO Agency costs refer to THE COST THAT ARISE DUE TO CONFLICTS OF INTEREST BETWEEN SHREHOLDERS AND MANAGERS An attribute of the corporation which means that, a corporation continue to exist even in death, incapacity, or insolvency of any stockholder or member RIGHT OF SUCCESSION Asking how it will make me feel about myself may not help determining ethical action FALSE Audit RESPONSIBILITY OF CFO/CEO Avoiding exploitation of consumer is? ETHICAL Avoiding fair trade practices is UNETHICAL Breaking laws is unethical issue TRUE Bribery is UNETHICAL Business ethics create bad image of the company FALSE Business ethics is the science of maintaining harmonious relationship with society TRUE Cheating is unethical TRUE Company bosses or those occupying the top level positions cannot be charged on unethical behaviors. FALSE Conflict of interest AGENCY ISSUES AND PROBLEMS Decision tree analysis is a form of quantitative risk analysis. TRUE Delphi technique provides independent and anonymous input regarding future events. TRUE Develop relations with financing sources RESPONSIBILITY OF CFO/CEO Eliminating a specific threat or risk usually by considering its causes. RISK AVOIDANCE Employees STAKEHOLDERS Ethical behavior are based on morals and values TRUE Ethical behaviors are behaviors that conforms on what individual might believe TRUE Ethics deals with moral or immoral acts TRUE Ethics deals with what is good or what is bad TRUE Ethics is a social science which deals with what is right or wrong TRUE Ethics program is training design to train employees on ethical discussion, role playing to orient the employees TRUE Formal laws typically represent consensus regarding ethical standards TRUE Generally all people lie minimally TRUE Ignoring social responsibility is UNETHICAL Implement internal control RESPONSIBILITY OF CFO/CEO In defining whether it is ethical or not, there is no need to identify balance FALSE Investors expect management to do all of the following except CONSULT THEM ON ETHICAL DECISIONS It is a fact finding technique for collecting information in face-to-face, phone and other form of discussion. INTERVIEWING It is reducing impact of a risk event by reducing the probability of its occurence. RISK MITIGATION It is used to derive a concensus among the panel of expers who make predictions in the future. DELPHI TECHNIQUE It stimulates a models' outcome to provide statistical distribution of the calculated results. MONTE CARLO ANALYSIS It uses a representation or model of a system to analyze the expected behavior or performance of a system. SIMULATION Law is merely basis for ethical decision TRUE Legal is ethical TRUE Management STAKEHOLDERS Managerial Defensiveness AGENCY ISSUES AND PROBLEMS Managerial opportunism AGENCY ISSUES AND PROBLEMS Managers of firms should only take actions that: ALL OF THE ABOVE Monitoring and controlling risks involve executing the risk management process to respond to risk events. TRUE Negative risk involves understanding potential problems that migh occur in the project and how they might impede project success. TRUE Negative risk management is an investment. TRUE Non-payment of overtime pay is ethical and lawful FALSE Non-payment of tax is unethical behavior TRUE One of the tasks for financial managers when identifying projects that increase firm value is to identify those projects where BENEFITS ARE AT LEAST EQUAL TO THE PROJECT’S COSTS Optimizing personal benefits at the expense of another people is acceptable TRUE Paying excessive salaries to the managers is not illegal but ethical FALSE Positive risk can also be called opportunities. TRUE Project risk management uses art and science. TRUE Project risk means the understanding that there can be negative or positive happenings that may affect the project objectives. TRUE Providing work life balance of employees is not a company responsibility to employees FALSE Public STAKEHOLDERS Recognition or assumption of responsibility for decisions, actions, policies, the administration, governance and implementation of programs and places ACCOUNTABILITY Refers to the party given the authority to implement the policies determined by the board in directing the course of business activities MANAGEMENT Respect of consumers is? ETHICAL Respecting the rights of everyone in the company is ethical TRUE Risk assessment can be conducted under risk planning. FALSE Risk management cycle risk monitoring is necessary to conduct risk analysis. FALSE Risk management is done by taking action to keep exposure with in an acceptance level and in a cost effective way. TRUE Risk management planning is concerned on increasing the probability of opportunities and decreasing threats. TRUE Shareholders are said to have a residual claim on the firm’s assets. What does this mean? SHAREHOLDERS DO NOT RECEIVE ANY PAYOFF FROM THE FIRM UNTIL THE CREDITORS ARE PAID Shareholders can attempt to overcome agency problems by all but the following: INCURINNG COST TO MONITOR MANAGERS Stakeholders who invested their capital in the corporation SHAREHOLDERS SWOT analysis can be used as a tool in identifying risk. this also identifies the broad negative and positive risk. TRUE The basic premise-on accountability is that accountable organizations will ALL CHOICES BELOW The collegial body that exercises the corporate powers of all corporations under the corporation code BOARD OF DIRECTORS The following are the external risk (independent) that the audit committee should consider except TURNOVER OF KEY PERSONNEL The goal of project risk management is to maximize the potential negative risk. FALSE The openness of information that is due to be made known by the stakeholders TRANSPARENCY The primary inside stakeholder of a corporation SHAREHOLDERS The rules dictating voting procedures and other aspects of corporate governance for a corporation are THE SECURITIES AND EXCHANGE COMMISSION’S RULES FOR CORPORATE GOVERNANCE The shifting of the consequences of a risk and responsibility for its managementand to a third party. RISK TRANSFERENCE The ultimate owner(s) of a corporation are THE EQUITY HOLDERS The word ethics is derived from the Greek word “Ethos” TRUE They are natural or artificial persons considered as the owners of the corporation SHAREHOLDERS This refers to the system whereby shareholders, creditors and other stakeholders of a corporation ensure that the management enhances the value of the corporation as it competes in an increasingly global marketplace CORPORATE GOVERNANCE To be ethical the company should offer products that will produce harm to people FALSE To solve work diversity problems there should have written Code of Ethics/ Conduct which outline the acceptable behaviors TRUE Under risk analysis, there is the idenfication of risk avoidance and contingency plans. FALSE Under risk identification, it prioritizes risk list. FALSE Unethical behaviors resulted to business loss TRUE Unfair treatment of employees is? UNETHICAL Values, morals and culture impacts ethical decision making TRUE What are the responsibilities of the board of directors in a corporation? MANAGE DAYTO-DAY OPERATIONS What do we call the possible conflict of interests between shareholders and management? AGENCY PROBLEM What is fiduciary? SOMEONE WHO INVEST AND MANAGE MONEY ON SOMEONE ELSE’S BENEFIT What is the basic guide for financial decisions making? MAKE DECISIONS WGERE THE TOTAL BENEFITS EXCEEDS THE TOTAL COSTS What is the proper goal for management of a firm? MAXIMIZE SHAREHOLDER’S WEALTH What should be the objective of a focus on stakeholders? PRESERVE STAKEHOLDER’S INTEREST Which form of invested capital is subject to most of the firm’s business and financial risk? DEBT CAPITAL Which is not among the effects of agency in governance? NONE OF THE ABOVE Which is not considered as risk identification tools. NONE OF THE ABOVE Which of the following describes the “collective actions problems” WHEN A CEO FAILS TO REPRESENT THE INTEREST OF SHAREHOLDERS IN DAILY DECISIONS OF THE FIRM Which of the following encourages managers to act in the shareholder’s interest? ALL OF THE ABOVE Which of the following is not a strength of the corporate form of business? UNLIMITED LIABILITY Which of the following is one of the most expensive methods for the firm to overcome agency costs? REQUIRE EXECUTIVES TO OWN A LARGE PROPORTION OF THEIR FIRM’S OUTSTANDING SHARES Which of the following is strength of the corporate form of business? UNLIMITED ACCESS TO CAPITAL Which of the following is the best bonding expenditure to help limit agency costs? PAYING THE MANAGER A BONUS IF THE FIRM PERFORMS WELL Which of the following parties have the proper incentives to make risky value increasing investment for the firm? SHAREHOLDERS Which of the following would contribute to information risk? ALL OF THE ABOVE Which one is not a benefit of good governance? REDUCTION OF CORPORATE VALUE Which one is not a role of CFO? NONE OF THE ABOVE Which one is not among the incentives and disincentives of agency principal-agent relationship? MANAGEMENT DEFENSIVENESS Which one is/are not part of corporate government? NONE OF THE ABOVE Which one is not the role of non- executive directors? IMPLEMENTS INTERNAL CONTROL Who said that the social responsibility of the corporation is to increase profit MILTON FRIEDMAN Why do shareholders bear most of the risk of running a firm? THEY ONLY HAVE A RESIDUAL CLAIM ON THE FIRM’S CASH FLOWS Work from home is unethical but legal TRUE Workarounds are employed responses to risk events that must be done when there is no contingency plans. TRUE You were just hired as the CEO of a company, your primary objective should be TO MAXIMIZE PROFITS
