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Question 1
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Financial analysts rely on gatekeepers but are not gatekeepers themselves.

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Question 2
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The most basic ethical issue facing professional gatekeepers and intermediaries in business contexts involves conflicts of interest.

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Question 3
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A large boost in share price decreases a firm's equity leverage for external expansion.

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Question 4
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The Sarbanes-Oxley Act is intended to provide protection where oversight did not previously exist.

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Question 5
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While the Sarbanes-Oxley Act is an internal mechanism to ensure ethical corporate governance, the Committee of Sponsoring Organizations (COSO) is an external mechanism.

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Question 6
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Risk assessment provides assessment capabilities to uncover vulnerabilities of a firm.

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Question 7
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Risk assessment and ongoing monitoring are elements that comprise the control structure of the Sarbanes-Oxley Act.

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Question 8
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COSO is one of the first efforts to address corporate culture in a quasi-regulatory framework in recognition of its significant impact on the satisfaction of organizational objectives.

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Question 9
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The COSO controls and the Sarbanes-Oxley requirements must be supported by a culture of accountability.

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Question 10
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Board members are permitted to act in a way that is inconsistent with the central goals of the organization.

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Question 11
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The board can prohibit actions to protect the long-term sustainability of a firm.

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Question 12
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Since audits are paid for by audited clients, there is an inherent conflict found in that financial arrangement.

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Question 13
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In terms of ethical theory, lofty compensation packages have a utilitarian function when they act as incentives for executives to produce greater overall results.

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Question 14
True/False

Laying-off of employees is one of the slowest ways to increase stock price.

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Question 15
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Insider trading is considered patently fair and ethical because it encourages employees to work hard to get access to company information.

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Question 16
Multiple Choice

Which of the following is true of gatekeepers?

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A
They are not bound to ethical duties.
B
Investors and boards are examples of gatekeepers.
C
They serve as intermediaries between market participants.
D
They are not responsible for ensuring conformance to fairness in the marketplace.
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Question 17
Multiple Choice

Which of the following rely on gatekeepers for fair and effective functioning of economic markets?

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A
Bankers
B
Auditors
C
Accountants
D
Financial analysts
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Question 18
Multiple Choice

The function of auditors as gatekeepers is to:

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A
verify a company's financial statements so that investors' decisions are free from fraud and deception.
B
evaluate a company's financial prospects or creditworthiness, so that banks and investors can make informed decisions.
C
ensure that decisions and transactions conform to the law.
D
function as intermediaries between a company's stockholders and its executives.
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Question 19
Multiple Choice

Identify the gatekeepers who evaluate a company's financial prospects or creditworthiness, so that banks and investors can make informed decisions.

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A
Investors
B
Attorneys
C
Auditors
D
Analysts
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Question 20
Multiple Choice

Identify the gatekeepers who ensure that decisions and transactions conform to the law.

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A
Accountants
B
Attorneys
C
Auditors
D
Analysts
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