Analysis Intermediate: Weighing Management Quality

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
In terms of financial transparency, investors should prefer companies that _______.
Choose wisely. There is only one correct answer.
Disclose the minimum information, plus useful information that helps investors understand the business. Certainly every company should disclose all the information required by the SEC and other regulators. Above and beyond that, we think investors should favor companies that are forthright about their businesses, in good times and bad, and provide information that helps investors understand operations.
2.
Which of the following signs may indicate that company directors are motivated to look out for the firms long-term interests?
Choose wisely. There is only one correct answer.
They own many shares of the company. If a director has a significant stake (in terms of his or her personal wealth) in the shares of the firm, we think this is the best sign that he or she will look out for the long-term interests of the firm.
3.
A stock analyst might interview a companys customers to get a sense of whether the company would be a good investment.
Choose wisely. There is only one correct answer.
True. An analyst might interview customers, typically larger institutional ones.
4.
Another term for fiduciary responsibility, according to Philip Fisher, is trusteeship.
Choose wisely. There is only one correct answer.
True. Fisher described the qualities he looks for in managers as trusteeship.
5.
Whom does the board of directors of a company represent?
Choose wisely. There is only one correct answer.
The shareholders. The board is elected by the shareholders and technically represents them.