1. Which of the following is the most appropriate definition of corporate governance?
A. A system of defined roles for management and the majority shareholders.
B. A system of checks and balances to minimize the conflicting interests among shareowners.
C. A system of internal controls and procedures by which individual companies are managed.
2. Which of the following is not consistent with the best practices of corporate governance?
A. All stakeholders should have the right to participate in the governance of the firm.
B. All committees within the firm should not benefit from the direct guidance of management.
C. Appropriate controls and procedures exist that cover management’s activities in running the daily operations of the firm.
3. Which of the following is least consistent with good corporate governance?
A. Limiting shareowners to cast votes by conditioning the exercise of their right to vote only on their presence at the annual general meeting.
B. Shareowners are able to cast votes in complete confidentiality.
C. Shareowners have the right to approve changes to corporate structures and policies that can alter the relationship between shareowners and company.
Tomorrow’s questions of the day will be on the topic of R41: Portfolio Management: An Overview.