Xam Questions for Cfa® Prep from Kaplan Schweser’s Cfa Study Curriculum

Chapter 1: Introduction to Corporate Finance

1.) Question ID#: 97622 agency relationships / corp governance

Which of the following statements regarding corporate governance practices is least accurate?

A) Corporate governance is not as important for firms with largely dispersed minority shareholders.

B) Good corporate governance practices ensure that the firm’s financial and operating activities are reported to shareholders in a verifiable manner.

C) Corporate governance is the system of internal controls/procedures by which firms are managed.

The correct answer was A.

Good corporate governance practices are extremely important in the case of firms with largely dispersed minority shareholders. Both remaining statements are accurate.

2.) Question ID#: 97621 agency relationships / corp governance

Corporate governance is the set of internal controls, processes and procedures defining how a firm is managed. Which of the following statements concerning corporate governance is least accurate?

A) Good corporate governance means that the board can work effectively with management.

B) Good corporate governance dictates that the firm’s financial, operating and governance activities are reported to stakeholders in a fair, accurate and timely manner.

C) Corporate governance defines the appropriate rights, roles and responsibilities of management, the board, and stakeholders within a firm.

The correct answer was A.

The board of directors must be able to act independently from management. Both remaining statements concerning corporate governance are accurate.

3.) Question ID#: 97513 agency problem / takeover defense

A special-purpose board committee with which of the following responsibilities would be least likely to act in the best interests of the shareholders?

A) Takeover defense.

B) Corporate governance.

C) Mergers and acquisitions.

The correct answer was A.

A committee responsible for takeover defense would...