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Free Questions › CFA › Corporate Issuers
Free CFA Corporate Issuers Practice Questions & Answers
900 exam-style Corporate Issuers questions. Pick your answer, hit Check answer, and see the worked solution — free to start, no signup.
100% free · No login to startQuestion 781
Which board structure includes a supervisory board?
Select an option first.
Correct answer: B — Two-tier
Explanation: B is correct because two-tier systems include a supervisory board. A is wrong because single-tier systems combine oversight and management. **C and D are not recognized governance structures.
Question 782
Which of the following is a benefit of staggered boards?
Select an option first.
Correct answer: B — Greater continuity in governance
Explanation: B is correct because staggered boards maintain continuity. A is wrong because staggered boards slow replacement. C is wrong because staggered boards reduce rapid shareholder influence. D is wrong because independence is unrelated.
Question 783
Which of the following best describes management’s role?
Select an option first.
Correct answer: B — Executing strategy and running operations
Explanation: B is correct because managers implement strategy and oversee operations. A is wrong because shareholders elect the board. **C and D are government or regulatory functions.
Question 784
Why are manager compensation packages often stock-based?
Select an option first.
Correct answer: B — To align manager interests with shareholders
Explanation: B is correct because stock-based pay aligns managers with shareholder value creation. A is wrong because cash expenses still exist. C is wrong because turnover is not the primary reason. D is wrong because profits are not guaranteed.
Question 785
Which stakeholder group may negotiate collectively with management?
Select an option first.
Correct answer: B — Employees
Explanation: B is correct because employees may form labor unions. **A, C, and D do not negotiate collectively in this manner.
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Question 786
Which of the following is a typical customer concern?
Select an option first.
Correct answer: B — Product safety and quality
Explanation: B is correct because customers expect safe, reliable products. **A, C, and D are governance or financial concerns.
Question 787
Which ESG category includes biodiversity and waste management?
Select an option first.
Correct answer: C — Environmental
Explanation: C is correct because biodiversity and waste are environmental issues. **A and B relate to people and governance. **D is not an ESG category.
Question 788
Which ESG category includes data protection and privacy?
Select an option first.
Correct answer: B — Social
Explanation: B is correct because data privacy affects customers and employees. **A and C are unrelated categories. **D is not an ESG category.
Question 789
Which ESG category includes bribery and corruption?
Select an option first.
Correct answer: C — Governance
Explanation: C is correct because governance includes ethical oversight. **A and B are unrelated. **D is not an ESG category.
Question 790
Which of the following is an example of a transition risk?
Select an option first.
Correct answer: B — New carbon regulations reducing demand for coal
Explanation: B is correct because transition risks arise from regulatory or market shifts. **A, C, and D are physical risks.
Question 791
Which of the following is an example of a physical climate risk?
Select an option first.
Correct answer: C — Severe weather damaging assets
Explanation: C is correct because physical risks involve direct climate-related damage. **A, B, and D are transition risks.
Question 792
Why might a coal company’s long-term debt be riskier than its short-term debt?
Select an option first.
Correct answer: B — Long-term debt is more exposed to stranded asset risk
Explanation: B is correct because long-term debt faces greater exposure to future regulatory changes. **A is not necessarily true. **C is unrelated. **D is wrong because long-term debt does mature.
Question 793
Which ESG issue could increase a hotel company’s operating costs?
Select an option first.
Correct answer: A — High employee turnover
Explanation: A is correct because turnover increases training and hiring costs. **B is governance-related but not a cost driver. **C affects energy-intensive industries more directly. **D is a risk-management strategy, not a cost driver.
Question 794
Which ESG improvement might lower a company’s discount rate?
Select an option first.
Correct answer: B — Transitioning to sustainable sourcing
Explanation: B is correct because sustainable sourcing reduces long-term risk. **A increases risk. **C increases financial risk. **D weakens governance.
Question 795
Which stakeholder group is most affected by poor workplace safety?
Select an option first.
Correct answer: B — Employees
Explanation: B is correct because employees face direct physical risk. **A, C, and D are indirectly affected at most.
Question 796
Which of the following is a social factor?
Select an option first.
Correct answer: B — Employee morale
Explanation: B is correct because morale is a social factor. **A is environmental. **C and D are governance.
Question 797
Which of the following is a governance factor?
Select an option first.
Correct answer: C — Board composition
Explanation: C is correct because governance includes board structure. **A is environmental. **B and D are social.
Question 798
Which of the following is a material environmental factor for an oil company?
Select an option first.
Correct answer: C — Climate transition risk
Explanation: C is correct because oil companies face major transition risks. **A and B are social factors. **D is governance.
Question 799
Which of the following is a potential consequence of poor environmental standards?
Select an option first.
Correct answer: B — Regulatory fines and cleanup costs
Explanation: B is correct because environmental failures lead to fines and cleanup expenses. **A is unlikely. **C and D are unrelated.
Question 800
Which of the following is a potential consequence of a major data breach?
Select an option first.
Correct answer: C — Reputational damage and litigation
Explanation: C is correct because data breaches harm reputation and may lead to lawsuits. **A is the opposite of what happens. **B is wrong because breaches increase costs. **D is wrong because ratings typically fall.
Question 801
Which of the following best explains why equity is more sensitive to ESG events than debt?
Select an option first.
Correct answer: C — Equity represents residual claims
Explanation: C is correct because residual claims absorb losses first. **A is wrong because equity is not fixed. **B is wrong because equity is junior. **D is wrong because equity returns are not guaranteed.
Question 802
Which ESG factor is most directly linked to executive compensation practices?
Select an option first.
Correct answer: C — Governance
Explanation: C is correct because governance covers compensation structures and oversight. A is wrong because environmental factors relate to nature and resource use. B is wrong because social factors relate to people and communities. **D is not an ESG category.
Question 803
Which of the following is an example of a governance failure?
Select an option first.
Correct answer: B — Poor board oversight
Explanation: B is correct because governance failures include weak oversight and poor board functioning. **A is environmental. **C and D are social issues.
Question 804
Which stakeholder group is most concerned with timely interest payments?
Select an option first.
Correct answer: B — Bondholders
Explanation: B is correct because bondholders rely on fixed interest payments. A is wrong because shareholders receive residual cash flows. **C and D are not creditors.
Question 805
Which of the following best describes a residual claim?
Select an option first.
Correct answer: C — A claim to what remains after all obligations
Explanation: C is correct because equity holders receive what is left after all other claims. **A and B describe debt. **D is incorrect because equity returns are not guaranteed.
Question 806
Which scenario illustrates a conflict between shareholders and bondholders?
Select an option first.
Correct answer: B — Shareholders push for a risky expansion financed by debt
Explanation: B is correct because risky, debt-financed projects increase default risk for bondholders. **A and D reduce risk. **C is bondholder protection, not a conflict.
Question 807
Why is debt considered a finite claim?
Select an option first.
Correct answer: B — It has fixed payments and a maturity date
Explanation: B is correct because debt has fixed interest and principal repayment schedules. **A is wrong because debt does mature. **C describes equity. **D is incorrect because lenders do not vote.
Question 808
Which of the following is a risk for equity investors but not for debtholders?
Select an option first.
Correct answer: A — Loss of entire investment
Explanation: A is correct because equity holders can lose everything in liquidation. **B and D apply to debt. **C is a debt advantage.
Question 809
Which group benefits most from higher leverage when the firm performs well?
Select an option first.
Correct answer: B — Shareholders
Explanation: B is correct because leverage amplifies equity returns. **A does not benefit because bond returns are fixed. **C and D are unaffected.
Question 810
Which group suffers first when a firm experiences financial distress?
Select an option first.
Correct answer: B — Shareholders
Explanation: B is correct because equity is the first to absorb losses. **A is protected by seniority. **C and D have contractual claims.
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