Kaplan - BT Mock 5 (chap 11-14)

The situation where directors operate the business for their own interest rather than the interest of shareholders is

• Conflict of interest
• Management dispute
• Shareholder conflict
• Agency problem

'Separation of ownership and control' refers to the fact that owners are always different people to the directors

• True
• False

Those involved in day to day running of an organization are

• Board of directors
• Non executive directors
• Executive directors
• Chief executive officer

Non executive directors are responsible for determining remuneration of executives

• True
• False

Joseph, a veteran in Unilevers with over three decades experience retired last year. Can he be appointed as an NED?

• Yes
• No

What can an NED accept as remuneration from a company?

• Shares, either ordinary or preference shares
• Equity options
• Pension payments
• A fixed payment for their time

Reviewing accounting policies and financial statements of a company is the responsibility of

• Audit committee
• Finance commitee
• Board of directors
• None of the above

Which of the following is not a type/category of committee?

• Ad hoc commitee
• Standing committee
• Non executive committee
• Executive committee

A committee is formed to investigate a one-off failure which had resulted in massive wastage. This is a type of

• Ad hoc commitee
• Standing committee
• Sub commitee
• Executive committee

What would reduce the agency problem in a listed/quoted company?

• Paying directors a fixed salary
• Paying directors a bonus of shares on the reported profit
• Employing directors in a rolling five year contract
• Offer directors large compensation at the time of dismissal