Corporate Finance - Corporate Finance Section 1

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26. Which of the following can create a divorce between ownership and voting control?

  • Option : B
  • Explanation : Dual share classes with different voting rights can create a divorce between ownership and voting control.
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27. Which of the following can be a red flag while analyzing corporate governance and stakeholder management of a company?

  • Option : C
  • Explanation : Multiple directors engaging in related party transactions with the company can create a conflict of interest which can be of concern to investors.
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28. An investment analyst would be most likely concerned about environmental pollution caused by a company because:

  • Option : C
  • Explanation : Environmental pollution would be a concern for investment analysts as it can invite regulatory action against the company and imposition of penalties, which can lower profits.
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29. Excluding companies from investment universe that violate accepted standards of environmental concerns is an example of:

  • Option : C
  • Explanation : Excluding companies that violate environmental protection standards is an example of negative screening.
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30. Considering a single factor in investment, such as energy efficiency or climate change is known as:

  • Option : B
  • Explanation : Thematic investing strategies typically consider a single factor, such as energy efficiency or climate change.
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