Corporate Finance Questions and Answers
Grade A+ 2023
Which of the following is most likely true about corporate governance?
a) It seeks to mitigate conflicting interests between insiders and external shareholders.
b) It is similar across most countries.
c) It considers neither the shareholder theory nor the stakeholder theory. - -Which of the
following is most likely true about corporate governance?
a) It seeks to mitigate conflicting interests between insiders and external shareholders.
Corporate governance is a set of rules and regulations which define the way companies are
managed. It determines the roles and responsibilities of the various stakeholders related to a
company. Company governance tends to differ in different parts of the world.
-Which of the following statements is most accurate about residual interest during bankruptcy?
a) Shareholders are paid before creditors under all circumstances.
b) Creditors have seniority over shareholders.
c) Both parties have equal rights. - -Which of the following statements is most accurate about
residual interest during bankruptcy?
b) Creditors have seniority over shareholders.
Creditors have seniority over equity providers and in case of bankruptcy are paid before most
equity owners.
-Which stakeholder group benefits the most when market value increases?
a) Shareholders.
b) Suppliers.
c) Creditors. - -Which stakeholder group benefits the most when market value increases?
a) Shareholders.
Shareholders are the actual owners of a company and therefore benefit from higher market value.
Creditors have predetermined cash flows and their payments are unrelated to higher market
valuation. Suppliers are, in a sense, short-term loan providers and therefore are no different from
creditors.
-Which is most likely true about shareholders and management?
a) Both stakeholder groups have similar levels of risk tolerance.
b) Shareholders have higher risk tolerance than managers.
c) Managers are more likely to take on risky projects when their salary is at stake. - -Which is
most likely true about shareholders and management?
b) Shareholders have higher risk tolerance than managers.
Shareholders have access to more diversified portfolios and therefore have higher risk tolerance
compared to managers.
, -What is most likely to happen if a company is subject to a takeover?
a) Shareholders with majority ownership would be in better position compared to minority
shareholders.
b) Both minority and majority shareholders have similar chances of receiving a good offer for
their shares.
c) Minority shareholders would be in a better position to receive a good price for their shares. - -
What is most likely to happen if a company is subject to a takeover?
a) Shareholders with majority ownership would be in better position compared to minority
shareholders.
Majority shareholders frequently get a premium offer at the expense of minority investors as any
acquirer would prefer to buy a company as quickly as possible by obtaining large blocks of
stocks.
-An agreement between a company and one of their suppliers would most likely be considered
part of a company's:
a) Organizational infrastructure.
b) Legal infrastructure.
c) Contractual infrastructure. - -An agreement between a company and one of their suppliers
would most likely be considered part of a company's:
c) Contractual infrastructure.
Contractual infrastructure manages different relationships between the company and its
stakeholders. Legal and government infrastructures are usually outside-driven and established by
different government agencies or regulators. Organizational infrastructure deals with internal
systems controls designed to manage all different stakeholders.
-Which is most accurate about the legal and contractual infrastructure of a company?
a) Both are company-driven infrastructures.
b) Contractual infrastructure is more company-driven while legal infrastructure is driven by
different governmental agencies and regulators.
c) Legal infrastructure is company-driven. - -Which is most accurate about the legal and
contractual infrastructure of a company?
b) Contractual infrastructure is more company-driven while legal infrastructure is driven by
different governmental agencies and regulators.
Legal and government infrastructures are usually externally-driven and established by different
government agencies or regulators. A contractual infrastructure, on the other hand, is typically
company-driven as it manages the relationships between the firm and its own stakeholders. A
good example of the latter is an agreement between a company and one of its supplier firms.
-Which statement reflects most correctly what effective Stakeholder management is?
a) It should prioritize the interests of certain stakeholders over others.
b) The interests of all stakeholders are identified and managed accordingly.
c) Creditors should have more rights than other stakeholder groups. - -Which statement reflects
most correctly what effective Stakeholder management is?
Grade A+ 2023
Which of the following is most likely true about corporate governance?
a) It seeks to mitigate conflicting interests between insiders and external shareholders.
b) It is similar across most countries.
c) It considers neither the shareholder theory nor the stakeholder theory. - -Which of the
following is most likely true about corporate governance?
a) It seeks to mitigate conflicting interests between insiders and external shareholders.
Corporate governance is a set of rules and regulations which define the way companies are
managed. It determines the roles and responsibilities of the various stakeholders related to a
company. Company governance tends to differ in different parts of the world.
-Which of the following statements is most accurate about residual interest during bankruptcy?
a) Shareholders are paid before creditors under all circumstances.
b) Creditors have seniority over shareholders.
c) Both parties have equal rights. - -Which of the following statements is most accurate about
residual interest during bankruptcy?
b) Creditors have seniority over shareholders.
Creditors have seniority over equity providers and in case of bankruptcy are paid before most
equity owners.
-Which stakeholder group benefits the most when market value increases?
a) Shareholders.
b) Suppliers.
c) Creditors. - -Which stakeholder group benefits the most when market value increases?
a) Shareholders.
Shareholders are the actual owners of a company and therefore benefit from higher market value.
Creditors have predetermined cash flows and their payments are unrelated to higher market
valuation. Suppliers are, in a sense, short-term loan providers and therefore are no different from
creditors.
-Which is most likely true about shareholders and management?
a) Both stakeholder groups have similar levels of risk tolerance.
b) Shareholders have higher risk tolerance than managers.
c) Managers are more likely to take on risky projects when their salary is at stake. - -Which is
most likely true about shareholders and management?
b) Shareholders have higher risk tolerance than managers.
Shareholders have access to more diversified portfolios and therefore have higher risk tolerance
compared to managers.
, -What is most likely to happen if a company is subject to a takeover?
a) Shareholders with majority ownership would be in better position compared to minority
shareholders.
b) Both minority and majority shareholders have similar chances of receiving a good offer for
their shares.
c) Minority shareholders would be in a better position to receive a good price for their shares. - -
What is most likely to happen if a company is subject to a takeover?
a) Shareholders with majority ownership would be in better position compared to minority
shareholders.
Majority shareholders frequently get a premium offer at the expense of minority investors as any
acquirer would prefer to buy a company as quickly as possible by obtaining large blocks of
stocks.
-An agreement between a company and one of their suppliers would most likely be considered
part of a company's:
a) Organizational infrastructure.
b) Legal infrastructure.
c) Contractual infrastructure. - -An agreement between a company and one of their suppliers
would most likely be considered part of a company's:
c) Contractual infrastructure.
Contractual infrastructure manages different relationships between the company and its
stakeholders. Legal and government infrastructures are usually outside-driven and established by
different government agencies or regulators. Organizational infrastructure deals with internal
systems controls designed to manage all different stakeholders.
-Which is most accurate about the legal and contractual infrastructure of a company?
a) Both are company-driven infrastructures.
b) Contractual infrastructure is more company-driven while legal infrastructure is driven by
different governmental agencies and regulators.
c) Legal infrastructure is company-driven. - -Which is most accurate about the legal and
contractual infrastructure of a company?
b) Contractual infrastructure is more company-driven while legal infrastructure is driven by
different governmental agencies and regulators.
Legal and government infrastructures are usually externally-driven and established by different
government agencies or regulators. A contractual infrastructure, on the other hand, is typically
company-driven as it manages the relationships between the firm and its own stakeholders. A
good example of the latter is an agreement between a company and one of its supplier firms.
-Which statement reflects most correctly what effective Stakeholder management is?
a) It should prioritize the interests of certain stakeholders over others.
b) The interests of all stakeholders are identified and managed accordingly.
c) Creditors should have more rights than other stakeholder groups. - -Which statement reflects
most correctly what effective Stakeholder management is?
