UNISA EXAM MEMO RSK2601 MAY/JUNE 2015
SECTION A (40 MARKS)
1. 2 11. 2 21. 1 31. 3
2. 2 12. 1 22. 4 32. 3
3. 2 13. 1 23. 2 33. 4
4. 1 14. 4 24. 2 34. 2
5. 1 15. 3 25. 3 35. 3
6. 4 16. 1 26. 2 36. 4
7. 3 17. 3 27. 2 37. 4
8. 4 18. 2 28. 3 38. 1
9. 3 19. 3 29. 1 39. 3
10. 2 20. 3 30. 3 40. 4
SECTION B (30 MARKS)
Question 1 (10 marks)
Corporate governance refers to the relationships among the management of an organisation, its
board, its shareholders and other relevant stakeholders. It also refers to the specific responsibilities
of boards of directors and management to maintain established relationships.
Corporate governance has an impact on the following business areas of an enterprise:
the efficient employment of assets
the attraction of lower cost capital
meeting social obligations by complying with laws and regulations
overall performance
Employing assets efficiently
Effective corporate governance promotes the efficient use of resources within a firm and the
economy at large. When an efficient corporate governance system is in place, debt, equity and
capital flow to enterprises that are capable of investing these resources efficiently in order to
produce goods and services that are most in demand and have the highest rate of return. In this
regard, effective governance helps to grow and protect scarce resources and to ensure that societal
needs are met. Effective governance should make it possible to replace managers who do not put
scarce resources to efficient use or who are incompetent in what they do.
Attracting lower-cost capital
Effective corporate governance helps enterprises to attract lower-cost capital by improving the
confidence of domestic and international investors and by assuring them that the assets are used in
the form agreed upon, whether the investment is in the form of debt or equity. This has a positive
impact on both debt and equity. For enterprises to succeed in competitive markets, corporate
managers must innovate relentlessly and efficiently, and constantly evolve new strategies to meet
changing circumstances.
Meeting social obligations: complying with laws and regulations
To succeed in the long term, enterprises must comply with the laws, regulations and expectations of
the societies in which they operate. Most corporations take their corporate citizenship seriously.
1
SECTION A (40 MARKS)
1. 2 11. 2 21. 1 31. 3
2. 2 12. 1 22. 4 32. 3
3. 2 13. 1 23. 2 33. 4
4. 1 14. 4 24. 2 34. 2
5. 1 15. 3 25. 3 35. 3
6. 4 16. 1 26. 2 36. 4
7. 3 17. 3 27. 2 37. 4
8. 4 18. 2 28. 3 38. 1
9. 3 19. 3 29. 1 39. 3
10. 2 20. 3 30. 3 40. 4
SECTION B (30 MARKS)
Question 1 (10 marks)
Corporate governance refers to the relationships among the management of an organisation, its
board, its shareholders and other relevant stakeholders. It also refers to the specific responsibilities
of boards of directors and management to maintain established relationships.
Corporate governance has an impact on the following business areas of an enterprise:
the efficient employment of assets
the attraction of lower cost capital
meeting social obligations by complying with laws and regulations
overall performance
Employing assets efficiently
Effective corporate governance promotes the efficient use of resources within a firm and the
economy at large. When an efficient corporate governance system is in place, debt, equity and
capital flow to enterprises that are capable of investing these resources efficiently in order to
produce goods and services that are most in demand and have the highest rate of return. In this
regard, effective governance helps to grow and protect scarce resources and to ensure that societal
needs are met. Effective governance should make it possible to replace managers who do not put
scarce resources to efficient use or who are incompetent in what they do.
Attracting lower-cost capital
Effective corporate governance helps enterprises to attract lower-cost capital by improving the
confidence of domestic and international investors and by assuring them that the assets are used in
the form agreed upon, whether the investment is in the form of debt or equity. This has a positive
impact on both debt and equity. For enterprises to succeed in competitive markets, corporate
managers must innovate relentlessly and efficiently, and constantly evolve new strategies to meet
changing circumstances.
Meeting social obligations: complying with laws and regulations
To succeed in the long term, enterprises must comply with the laws, regulations and expectations of
the societies in which they operate. Most corporations take their corporate citizenship seriously.
1
