Mock Exam 1

Question 1

Which two of the following are elements of the OECDs Principles of Corporate Governance?

1. The rights and equitable treatment of shareholders.
2. The company’s relationship with institutional investors, stock markets and other intermediaries.
3. The right of shareholders to all of a company’s profit.
4. The right to real-time information concerning the company’s performance.
5. The right of shareholders to participate in quarterly strategic meetings of the company.

Answer 1

1. The rights and equitable treatment of shareholders.

AND

2. The company’s relationship with institutional investors, stock markets and other intermediaries.

Question 2

Are the Wates Principles mandatory to follow or are they voluntary code

Answer 2

Wates Principles are voluntary code, so there is no requirement to follow them

Question 3

What is an example of observer bias?

Answer 3

When a schools inspector grades the performance of a teacher

Question 4

Which TWO of the following items may be discounted by an exporter so that payment from a customer is received early?

A crossed cheque drawn by the customer.

A letter of credit issued by the customer’s bank.

A bill of exchange drawn by the customer’s bank.

A bill of exchange drawn by the customer.

A letter of credit issued by the exporter’s bank.

Answer 4

A letter of credit issued by the customers bank

A bill of exchange drawn by the customer

Question 5

If a company is a premium listed company, what is the rule on the number of non-exec directors?

Answer 5

50% of directors

Question 6

Hatfield plc is a small Premium-listed company outside the FTSE 350. Including the company’s chairman, the board of directors totals eight people.

The company’s board must, therefore, include a minimum of

Answer 6

4 directors

Question 7

What is an example of a secondary bank?

Answer 7

Merchant bank

Question 8

Is “Greater potential for cost savings” an advantage when a company is decentralised in terms of their organisational structure?

Answer 8

No

Question 9

Identify which of the following statements about an information processing system is correct.

Rules and information are processed to suggest decisions.
Information is input and processed to produce data.
Data are input and processed to produce information.
Rules and information are used to produce data.

Answer 9

Information is input and processed to product data