Question 1

Zygaton Corp.is a firm that offers its customers financial services.Which of the following members of its board of directors should ideally bring vast knowledge and a new perspective in order to ensure that the firm's strategy will serve the financial interests of the shareholders?

Accepted Answer

A)  Javier, an employee 
B)  Maria, an outside director 
C)  Cataleya, a senior executive 
D)  Esposito, a senior manager

Question 2

Autumn Inc.is a company that functions on its own.It has the right to enter into contracts, hire employees, and also pay taxes.The shareholders of the company are entitled to its profits.Autumn Inc.is an example of a _____.

Accepted Answer

A)  cooperative 
B)  limited partnership 
C)  general partnership 
D)  corporation

Question 3

Tinos Inc.is a company that manufactures toys.Which of the following would be its primary stakeholder?

Accepted Answer

A)  Other local toy manufacturers 
B)  Foreign toy manufacturers 
C)  People who purchase its toys 
D)  People who purchase toys in foreign countries

Question 4

Which of the following statements is true of the agency problem facing the modern public corporation?

Accepted Answer

A)  It arises when a corporation hires a private agency to conduct audits of its business practices. 
B)  It arises when a government agency is assigned with the task of identifying corrupt practices by a corporation. 
C)  It arises as a consequence of the separation of ownership and control in the corporation. 
D)  It arises as a consequence of the managers of the corporation focusing on enhancing shareholder value.

Question 5

Which of the following statements is true of the intrinsic stakeholder model of business management?

Accepted Answer

A)  It is the belief that stakeholder groups have the right to be considered in decisions that will impact them. 
B)  It is the belief that giving importance to stakeholders makes it difficult for managers to effectively run their firms. 
C)  It is the belief that stakeholder interactions have longer-term consequences on a firm's performance and competitive advantage. 
D)  It is the belief that financial capital is the most important input into making a business successful.

Question 6

Pick N Shop Inc.operates a chain of supermarkets.The company offers a bonus of $500 to its sales representatives if they can sell products worth $5,000 per month.It also offers bonuses and other benefits to its employees and managers.By offering such bonuses, Pick N Shop Inc.is primarily trying to avoid a(n) _____.

Accepted Answer

A)  hostile takeover 
B)  proxy fight 
C)  agency problem 
D)  accountability problem

Question 7

Explain with examples how the engagement of a company with its key stakeholders can affect its overall performance and competitive advantage.

Accepted Answer

The answer of Explain with examples how the engagement of...

Question 8

Raj, a student of business management, claims that the shareholder primacy model is not a good model of business management.Which of the following statements should he use in order to best support his claim?

Accepted Answer

A)  The shareholders are not the legal owners of the corporation's assets. 
B)  Financial capital is the most important input into making a business successful. 
C)  The shareholders cannot not trade or own any stock of the corporation. 
D)  Managing for shareholder value creates negative consequences for firms.

Question 9

Salma owns stocks of an e-commerce business.In exchange for the money she has invested, she has received two property rights from the business.Which of the following is most likely to be one of the property rights given to her?

Accepted Answer

A)  She will get a share of the residual earnings of the business. 
B)  She will be the only owner of the assets of the business. 
C)  She will get ownership of the private properties owned by other investors of the business. 
D)  She will be entitled to a higher percentage of the profits earned by the business.

Question 10

Briefly describe agency problems.How can they destroy value in an organization?

Accepted Answer

The answer of Briefly describe agency problems.How can they destroy...

Question 11

Yellow Moon Inc.is a company that manufactures consumer electronics.Its investors will be primarily affected by the business through the:

Accepted Answer

A)  training and development provided to its employees. 
B)  employees living in its community. 
C)  earnings generated by the company. 
D)  order consistency of the company.

Question 12

Agrolus Corp.is a company that manufactures fertilizers used in farming.Its customers consist of farmers who purchase its products.Its employees will be affected by the business through the:

Accepted Answer

A)  working conditions of the company. 
B)  payment it makes to its suppliers. 
C)  earnings it generates for its investors. 
D)  fertilizers sold by the company.

Question 13

Chang, the founder of a multinational corporation, believes that his business should mainly focus on the benefit of those people who own its stock.In this scenario, he most likely follows _____, a model of business management.

Accepted Answer

A)  stakeholder model 
B)  shareholder primacy 
C)  customer value 
D)  stakeholder value

Question 14

Peach Corp.operates a chain of supermarkets.The managers and employees of the company have been on strike for months due to their differences with its owners.As a result, the share price of the company has fallen to historic low.Globe Investments decides to purchase a majority of the shares of Peach Corp., confident that it can manage the company better.Globe Investments makes a public offer to purchase the shares of the investors who are dissatisfied with the performance of Peach Corp.The offer made by Globe Investments can be termed as a(n) _____.

Accepted Answer

A)  proxy offer 
B)  tender offer 
C)  discount offer 
D)  private offer

Question 15

Define ethical behavior.

Accepted Answer

The answer of Define ethical behavior....

Question 16

Which of the following statements is true of an individual proprietorship?

Accepted Answer

A)  It is owned by two or more partners. 
B)  It is run and owned by the same person. 
C)  It is considered a distinct and separate entity from its owners. 
D)  It is a rare form of business ownership in the United States.

Question 17

Which of the following statements is true of corporate culture?

Accepted Answer

A)  An organization's culture, by itself, can be regarded as good. 
B)  Culture proves to be very weak because it cannot inform action without the need for supervision. 
C)  Put simply, culture is just how things are done in any organization. 
D)  It consists of behavioral assumptions that are considered inappropriate for organizational members.

Question 18

Javier is the shareholder of a cellphone manufacturing company.Which of the following statements about him is true?

Accepted Answer

A)  He does not have any claim to the residual earnings of the company. 
B)  He is the only person entitled to receive the profits of the company. 
C)  He is protected from being taken advantage of by the management team due to his oversight rights. 
D)  He is not able to exchange money with the corporation without a clearly specified payment in return.

Question 19

Explain the difference between the shareholder primacy model and the stakeholder model.

Accepted Answer

The answer of Explain the difference between the shareholder primacy...

Question 20

DigiGo Inc.is a multinational corporation that manufactures and sells home appliances.Who among the following are its principals?

Accepted Answer

A)  The people who own stocks of the company 
B)  The people who purchase the home appliances it manufactures 
C)  The electronics engineers who work for the company 
D)  The retailers that sell the home appliances it manufactures

Exam 13: Corporate Governance and Ethics