Corporate Governance question

I don’t know about the rest of you, but I am finding the CG section really tough. Finished the CFAI readings and then took the end-of-chapter questions - got only 10 right from the first 19 questions!! Passing this section seems to requires 95% rote learning as opposed to just understanding the concepts well, and my memory is fairly average at best. Anyone else having trouble with the q’s from this chapter?? Anyway, sample question: ------------------------------- All of the following are core attributes of an effective corporate governance system except: a) fairness and accuracy in identifying inherent conflicts of interest. b) clearly defined governance responsibilities for managers and directors. c) identifiable and measurable accountabilities for the performance of responsibilities d) delineation of shareholders and other core stakeholders rights.

D I think. SS8 was ok, and i only just started on SS9.

I found SS8 OK as well - SS9 is the one I’m struggling with. While I’m on the topic, I got this question wrong afer going back and reviewing the material a second time. The objectives of an effective system of corporate governance include all of the following except: a) ensure that the assets of the company are used efficiently and productively b) eliminate or mitigate conflicts of interest among stakeholders c) ensure that the assets of the company are used in the best interests of the investors and other stakeholders d) ensure complete transparency in disclosures regarding operations, performance, risk, and financial position. I’ll give the answer to both Qs once a few people have had the chance to answer.

i found the questions here ridiculous… which flowery statement doesn’t belong?? basically.

B on the second one?

I’m gonna go with D for both of them.

  1. B 2) D These are just my eductated guesses, I had this junk for the CMA certification and internal controls was h3llish for that so when I saw it in L2 curriculum I knew I was in trouble. What are the correct answers?

A) A)

Isn’t the answer A for both? This stuff was in LI 2006 but it’s been a few months since I read this in the LII CFAI curriculum. Notable keywords are “attributes” and “objectives” in the first and second questions, respectively. Answer A is the only non-adjective (it’s a verb) in question A. A verb can’t be an attribute. For the second question, a big hint is that there’s two choices related to the use of assets (A and C specifically). So which is it? I think A is a bit vague and remember C sounding more consistent with what I’ve read. Assets being used in the interest of shareholders addresses both the positive NPV considerations and principal-agent issues. Anyway, my $0.02 for now.

I see hiredguns1 point for the second one. I would say A for #2 as well. I do not recall the text suggesting that assets be used efficiently, just in the best interests of the shareholders. I want to stick with D for the first one. Although I have only started this section so I could be completely wrong.

The correct answers: A D The phrasing/grammar/etc. of several of the questions for reading 34 are pretty appalling as far as i’m concerned. It doesn’t seem to be of the same standard as the other chapters - are these drafts or just prepared by someone with bad england? The answer to the second question especially confuses me, because ‘D’ is “almost” word-for-word from the text. the only problem I can see is that it does not say “transparency and accuracy” - just “transparency”. Surely transparency in disclosures is still an objective of an effective system?

this is not good

No, not good at all.

lol, I love working my way logically towards the wrong answer. Good thing I’m about ready to start reviewing, hopefully I’ll get this habit out of my system before exam day!


I just read CG in Schweser tonight and only got 1 of the above question right. This sucks.

Well, at least you did better than urymoto1 who apparently read the question and the correct answers and yet still managed to post the wrong answer.

HOLY CRAP. Just completed reading 34 and the accompanying questions. On 1-19 I batted 8/19 (42%) despite feeling confident that I was getting them right. I felt somewhat consoled by the fact that I got 6/6 on 20-25 which were the questions pulled from the 2006 exam. My feeling is that the questions on the actual CFA tests and practice tests are typically pretty clearly worded and expressed. Questions 1-19 were ambiguous and I felt needed revising. I think this is a clear illustration of the CFA prep material questions being above and beyond what is found on either the test or the practice tests given that I went 42% on 1-19 and 100% on the recycled test questions which were much clearer. So, it sucks, but I wouldn’t sweat it. Just revisit it lightly when you’re reviewing.

I went with C & C, just to figure out that both my answers are wrong :frowning:

I just got through these questions and I agree that they’re garbage. 20-25 were clearly stated and easy to understand, but the first 19 questions were absurd. I had no clue what they were asking in some of them.