Reading Quiz 2

Which of the following is not an instance of "insider trading"?

A marketing executive briefing stock analysts on the company's sales performance.

The board committee that administers and approves salaries and benefits of high-level managers in a company is called the:

Compensation committee

Dividends and Capital Gains

Investors may receive an economic benefit from the ownership of stock by receiving:

The "agency problem" arises when:

Managers act in their own interest, rather than in the interest of shareholders.

The mission of the Securities and Exchange Commission (SEC) is to:

Protect shareholders' rights by making sure that stock markets are run fairly.

How are directors (members of corporate boards) selected?

Shareholders elect the directors from a list of candidates.

Make dangerous products like tobacco or weapons pollute the environment discriminate against employees

Social investors seek to eliminate from their investment portfolios companies that:

Which of the following is not a legal right of shareholders?

To vote on who will become chief executive officer (CEO).

High Salaries provide an incentive for innovation and risk taking

Which of the following arguments supports the concept of high executive compensation?

Which of the following statements is not true about shareholders?

They own equal shares of company assets.