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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
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