Question 1

Strike price is the price at which the stock was trading when the option was originally granted.

Accepted Answer

A) True 
 B)False

Question 2

Phil is an employee at Global Tech Inc.He is considered an external stakeholder.

Accepted Answer

A) True 
 B)False

Question 3

The internal research department of Libra Inc.has found that the packaging of health supplements produced by the company is faulty,and resulting in poor quality.Despite this knowledge,the company has not improved the packaging and instead has advertised to its customers that their packaging is foolproof.Which of the following concepts is illustrated in this scenario?

Accepted Answer

A) Information manipulation 
B) Anticompetitive behavior 
C) Agency strategy 
D) Information symmetry 
E) On-the-job consumption 
A) Information manipulation 
B) Anticompetitive behavior 
C) Agency strategy 
D) Information symmetry 
E) On-the-job consumption

Question 4

Matthew is a divisional manager at Venus Inc.and reports to the CEO of the company.The CEO delegates resources and authority to Matthew so that he can ensure good performance from the division.Matthew has more employees working for him than required and he has not told the CEO about this,even though there are other departments that are in need of more employees.Which of the following concepts is illustrated here?

Accepted Answer

A) Information asymmetry 
B) On-the-job consumption 
C) Greenmail 
D) Glass-ceiling effect 
E) Takeover constraint 
A) Information asymmetry 
B) On-the-job consumption 
C) Greenmail 
D) Glass-ceiling effect 
E) Takeover constraint

Question 5

Which of the following is NOT a governance mechanism used to align the interests of managers and stockholders?

Accepted Answer

A) Self-dealing 
B) The board of directors 
C) Stock-based compensation schemes 
D) Strategic control systems 
E) Takeover constraints 
A) Self-dealing 
B) The board of directors 
C) Stock-based compensation schemes 
D) Strategic control systems 
E) Takeover constraints

Question 6

To make sure that ethical issues are considered in business decisions:

Accepted Answer

A) companies should eliminate the principal-agent approach. 
B) companies should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) top managers should generously grant stock options. 
E) companies should hire and promote employees with a strong focus on economic gains. 
A) companies should eliminate the principal-agent approach. 
B) companies should have a no-layoff policy. 
C) top managers should articulate and model ethical behaviors. 
D) top managers should generously grant stock options. 
E) companies should hire and promote employees with a strong focus on economic gains.

Question 7

A stock option is a right to buy:

Accepted Answer

A) shares of the company's stock at the stock's current price. 
B) shares of the company's stock at half the stock's current price. 
C) shares of the company's stock at a predetermined price at some point in the future. 
D) bonds issued by the company. 
E) stock in an underperforming company. 
A) shares of the company's stock at the stock's current price. 
B) shares of the company's stock at half the stock's current price. 
C) shares of the company's stock at a predetermined price at some point in the future. 
D) bonds issued by the company. 
E) stock in an underperforming company.

Question 8

_____ are internal stakeholders in a company.

Accepted Answer

A) Customers 
B) Government regulators 
C) Board members 
D) Suppliers 
E) Creditors 
A) Customers 
B) Government regulators 
C) Board members 
D) Suppliers 
E) Creditors

Question 9

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.Which of the following governance mechanisms is illustrated in this scenario?

Accepted Answer

A) Stock options 
B) Self-dealing 
C) The takeover constraint 
D) Employee incentives 
E) Greenmail 
A) Stock options 
B) Self-dealing 
C) The takeover constraint 
D) Employee incentives 
E) Greenmail

Question 10

There is a certain amount of performance ambiguity inherent in the relationship between a principal and agent.

Accepted Answer

A) True 
 B)False

Question 11

_____ is a situation where an agent has more knowledge about resources he or she is managing than the principal has.

Accepted Answer

A) Information manipulation 
B) On-the-job consumption 
C) Information asymmetry 
D) Greenmail 
E) Self-dealing 
A) Information manipulation 
B) On-the-job consumption 
C) Information asymmetry 
D) Greenmail 
E) Self-dealing

Question 12

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

Accepted Answer

A) True 
 B)False

Question 13

Jacob is a senior manager at Aries LLC. He has been earning significant bonuses in addition to his salary.He often misrepresents the financial information about the operations he handles,and he acquires more financial resources than he actually needs to run operations.Which of the following concepts is illustrated in this scenario?

Accepted Answer

A) Glass-ceiling effect 
B) Self-dealing 
C) Agency strategy 
D) Takeover constraints 
E) Stock options 
A) Glass-ceiling effect 
B) Self-dealing 
C) Agency strategy 
D) Takeover constraints 
E) Stock options

Question 14

Gamma Corp.recently bought stocks in an under-performing company that has failed to maximize stockholder wealth.Gamma Corp.made changes to the top management structure of the company and persuaded the management to pursue strategies that maximize the wealth of stockholders.Gamma Corp.has been able to earn millions by doing so.Which of the following concepts is illustrated in this scenario?

Accepted Answer

A) Greenmail 
B) Agency theory 
C) Information asymmetry 
D) Self-dealing 
E) On-the-job consumption 
A) Greenmail 
B) Agency theory 
C) Information asymmetry 
D) Self-dealing 
E) On-the-job consumption

Question 15

Which of the following statements about the Board of Directors is NOT true?

Accepted Answer

A) Board members are elected by stockholders. 
B) The Board can be held legally accountable for a company's actions. 
C) The Board has the legal authority to hire, fire, and compensate the CEO. 
D) All the directors are full-time employees of the company. 
E) Outside directors help perform the monitoring function of the Board. 
A) Board members are elected by stockholders. 
B) The Board can be held legally accountable for a company's actions. 
C) The Board has the legal authority to hire, fire, and compensate the CEO. 
D) All the directors are full-time employees of the company. 
E) Outside directors help perform the monitoring function of the Board.

Question 16

Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople.Identify and discuss the common examples of unethical decisions that businesspeople have made.

Accepted Answer

Unethical behavior often occurs when peo

Question 17

All stakeholders have an exchange relationship with the company.

Accepted Answer

A) True 
 B)False

Question 18

Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

Accepted Answer

A) True 
 B)False

Question 19

Ethical dilemmas are situations where there is no agreement over exactly what the accepted principles of right and wrong are.

Accepted Answer

A) True 
 B)False

Question 20

To foster ethical behavior through organizational culture,businesses should:

Accepted Answer

A) avoid explicitly articulating values that place a strong emphasis on ethical behavior. 
B) draft a formal statement of the ethical priorities they will follow. 
C) encourage self-dealing among managers. 
D) eliminate the need for a moral compass. 
E) avoid putting strong governance processes in place. 
A) avoid explicitly articulating values that place a strong emphasis on ethical behavior. 
B) draft a formal statement of the ethical priorities they will follow. 
C) encourage self-dealing among managers. 
D) eliminate the need for a moral compass. 
E) avoid putting strong governance processes in place.

Strike price is the price at which the stock was trading when the option was originally granted.

Phil is an employee at Global Tech Inc.He is considered an external stakeholder.

Which of the following is NOT a governance mechanism used to align the interests of managers and stockholders?

To make sure that ethical issues are considered in business decisions:

A stock option is a right to buy:

_____ are internal stakeholders in a company.

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.Which of the following governance mechanisms is illustrated in this scenario?

There is a certain amount of performance ambiguity inherent in the relationship between a principal and agent.

_____ is a situation where an agent has more knowledge about resources he or she is managing than the principal has.

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

Which of the following statements about the Board of Directors is NOT true?

Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople.Identify and discuss the common examples of unethical decisions that businesspeople have made.

All stakeholders have an exchange relationship with the company.

Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

Ethical dilemmas are situations where there is no agreement over exactly what the accepted principles of right and wrong are.

To foster ethical behavior through organizational culture,businesses should:

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Level Strategy: Related and Unrelated Diversification

Implementing Strategy Through Organization

Filters

Exam 11: Corporate Performance, Governance, and Business Ethics

Strike price is the price at which the stock was trading when the option was originally granted.

Phil is an employee at Global Tech Inc.He is considered an external stakeholder.

Which of the following is NOT a governance mechanism used to align the interests of managers and stockholders?

To make sure that ethical issues are considered in business decisions:

A stock option is a right to buy:

_____ are internal stakeholders in a company.

Nicole is a salesperson at a local Ford dealership.Her bonus pay is dependent upon surpassing sales targets,thus increasing the profitability of the company.Which of the following governance mechanisms is illustrated in this scenario?

There is a certain amount of performance ambiguity inherent in the relationship between a principal and agent.

_____ is a situation where an agent has more knowledge about resources he or she is managing than the principal has.

Stock-based compensation schemes for senior executives are designed to align the interests of managers with those of stockholders.

Which of the following statements about the Board of Directors is NOT true?

Business ethics are concerned with accepted principles of right or wrong governing the conduct of businesspeople.Identify and discuss the common examples of unethical decisions that businesspeople have made.

All stakeholders have an exchange relationship with the company.

Agency theory offers a way of understanding why managers do not always act in the best interests of stakeholders.

Ethical dilemmas are situations where there is no agreement over exactly what the accepted principles of right and wrong are.

To foster ethical behavior through organizational culture,businesses should:

Strategic Leadership: Managing the Strategy Making Process for Competitive Advantage

External Analysis: The Identification of Opportunities and Threats

Internal Analysis: Resources and Competitive Advantage

Building Competitive Advantage Through Functional Level Strategies

Business Level Strategy

Business Level Strategy and the Industry Environment

Strategy and Technology

Strategy in the Global Environment

Corporate-Level Strategy: Horizontal Integration, Vertical Integration, and Strategic Outsourcing

Corporate Level Strategy: Related and Unrelated Diversification

Implementing Strategy Through Organization

Filters