Given that zeros directors all previously worked at

20. Given that Zero’s directors all previously worked at the company, which of the
following would you recommend for a more effective system of corporate
governance?
A. Ensure that assets are used efficiently and productively and in the best
interests of investors and stakeholders.
B. Eliminate or mitigate conflicts of interest among stakeholders, particularly
between managers and shareholders.
C. Identify and measure accountabilities for the performance of the Board’s
responsibilities.
D. Provide complete transparency and accuracy regarding operations,
performance, and financial position.
21. Which of the following best describes the objectives of Zero’s board that the
consultant has not yet reviewed?
7

22. Which of the following is the most critical activity that an analyst can engage in to
assess the quality of the corporate governance system at Zero, among those that the
consultant did not review?
23. Which is least likely to be a component of a developing country’s equity premium? 24. Assuming current assets and current liabilities remain a constant proportion of sales
(20 percent and 10 percent respectively), as sales grow 7 percent annually, through
time the current ratio will most likely:
A. increase.
B. decrease.
C. remain unchanged.
D. increase if profits are reinvested.
25. Unit fixed costs is $320,000 per month. The firm is expected to sell 12,000 handbags
per month. Variable cost per handbag is $54. At what cost must it sell each item in
order to break-even?