20.Bruce Gray, CFA, is a portfolio manager with United Portfolios, manages a discretionary account of a billionaire client Howard Ripley. Howard had often reminded Bruce that if the performance of his portfolio with United Portfolio exceeds the benchmark by 5%, Bruce and his family are welcome to use his 50 foot luxury yacht for a week. Bruce had enjoyed his summer vacation his year on-board Howard's yacht this year for outperforming the benchmark on Howard's portfolio by 8%. He spoke with his immediate supervisor about the arrangement shortly before he went on the trip and his supervisor agreed with that his hard work and good results deserved the reward. Which of the following is correct?

A. Bruce was not in violation of the Code and Standards because being a charterholder he had not been unduly influenced by the contingent reward offered by his client.

B. Bruce was not in violation of the Code and Standards since his supervisor had agreed to the additional compensation arrangement.

C. Bruce was in violation of the Code and Standards because all additional compensation arrangements have to be agreed in writing by all 3 parties.

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21.Jane Maine recently hired an intern to help her at the office, to basically process documents submitted by new clients who have signed up for her bank's services.The intern was just handed a recently processed account document and was not given any prior training or processing manual since she felt that being from a top university, the intern was "smart enough" to figure out how the documents should be processed.Due to the holiday season in December, Jane had decided to do a random sampling of the intern's work before the new client documents are being submitted to the account opening department.During other months, Jane herself or her full time assistant would check all new account documents as the submissions have to be signed off by a full time employee at the bank.At an audit after the financial year end, the bank regulator had found some incomplete and incorrect submissions which constituted a regulatory breach and the bank was penalised for these mistakes.

Jane had:

A. Violated the Code and Standards by not providing adequate supervision an important process when new clients were beings recruited.

B. Violated the Code and Standards by asking an intern to process a regulated activity.

C. Not violated the Code and Standards by asking the intern to process a regulated activity because a sample of the processed work was provided.

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22.Executives of a corporation carry accountability to _____________.

A. The shareholder's interest only.

B. The public's interest only.

C. Both the shareholder's and public's interest.

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23.The 1992 Cadbury Report argued for a guideline of "comply or explain". However, the Sarbanes-Oxley Act of 2002 incorporates the approach of _______.

A. "Comply or else"

B. "Comply or resign"

C. "Comply or pay a fine"

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24.The following are processes to alleviate the problem of asymmetry of information between the agents and the principals in the context of a publicly listed company, except:

A. Non-executive directors are given separate and independent access to management and company secretary.

B. Management supplies the board of director with a monthly financial and operations report.

C. The company protect the interest of the shareholders by delaying the announcement negative news about the company.

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25.The following describe an improvement in practicing good corporate governance, except:

A. Merge the roles of CEO and chairman of the board into one individual.

B. Separate the roles of CEO and chairman of the board into different individuals.

C. Hire outside independent individuals with relevant knowledge and experience to sit on the board of directors.

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26.Which of the following is NOT a step to being a truly effective board?

A. Create a climate of trust and candor.

B. Foster a culture of "rubber stamping".

C. Let the board assess leadership talent.

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27.Even with a board that passes all of the tests and meets all of the established criteria, ethical misconduct still comes down to ______.

A. The corporate culture.

B. The type of business.

C. The personalities involved.

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