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1.
You can get information on the backgrounds and qualifications of the managers of companies you are interested in from the Securities and Exchange Commission.
True. Companies include information on their managers in their shareholder statements, which are filed with the SEC.
2.
Investors should look for companies that _______.
Have set clear goals for measuring progress. Good measurement is good management.
3.
A great way to reward managers for building a successful business is to _______.
Pay them a reasonable salary and a bonus tied to company profits. We like to see executive pay, in any form, tied to the operating and financial performance of the company. The best way to motivate executives is to pay them a reasonable salary (maybe even a "low" salary) and give them the opportunity to earn a significantly higher amount in the form of a bonus. Tying executive compensation to the stock price creates a perverse, short-term incentive for managers to say good things in public about the company rather than focus on making the company run better.
4.
A companys board of directors represents its management.
False. The board represents the shareholders and their interests.
5.
To learn about a prospective company, stock analysts might interview _______.
All of the above. An analyst might interview all of them, and others as well, such as suppliers.
