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Flashcards in Tutorial 1 Deck (15):
1

Financial engineering is about:

Optimising returns on investment by trading-off rewards against risk

2

Investment decisions are based on

1 - Project appraisal

2 - Choice of technologies/projects

3 - Market research

3

The financial engineer is

1 - A loophole exploiter

2 - Conversant with tax and business laws

3 - A deal maker

4

‘Double Irish with Dutch Sandwich’ is

1 - A transfer pricing scheme

2 - A scheme designed to exploit tax loopholes

3 - A tax evasion scheme

5

The following are important tools for the financial engineer

1 - Financial reports

2 - Common stocks, preferred stocks, bonds and treasury bills

6

Rogue financial engineers thrive where

1 - There is breakdown in corporate governance

2 - The transparency and disclosure convention is least observed in the system of corporate governance

7

Corporate governance is

1 - A mechanism for resolving conflicting interests of multiple stakeholders in corporate business
2 - A system of rules, practices and processes by which companies are organised, managed, directed and regulated

8

One or more of the following would do little or nothing to earn a company the accolade of good corporate citizenship

Concern for the wellbeing of political parties

9

The ----------------- was passed by the US Congress in 2002 to restore public confidence in companies and markets after accounting fraud bankrupted high-profile companies.

Sarbanes-Oxley Act

10

The Higgs Report, which was published in 2003, is about

Strategies for improving corporate governance in the UK by enhancing the role and effectiveness of non-executive directors

11

The professional skills of the financial engineer are perfectly substitutable by that of the accountant.

False

12

Financial engineering is corporate governance by another name

False

13

The onset of the global financial crisis in 2008 was largely triggered by a financial engineering process known as ‘securitisation’

True

14

Generally speaking, the regulatory issues of corporate governance are considered to be relatively more important than issues relating to the profitability of businesses in less developed countries.

True

15

It is permissible in corporate governance for special purpose entities/vehicles (SPEs/SPVs) created by companies to be used as off-balance sheet vehicles for offloading corporate debts

False