ARM 400 Tested and Proven Exam
Strategies From Esteemed Educators
Worldwide Graded questions with answers
One corporate governance issue is accountability of directors. One method to increase
accountability of directors is to Select one: A. Include more inside directors.
B. Decrease the independence of audit and compensation committees.
C. Conduct regular meetings of outside directors without management being present.
D. Ensure that the chief executive officer serves as board chairman. - -correct ans- -C
Rufus owns 1500 shares in the ARM Corporation. Recently, ARM has shouldered significant
liabilities due to pollution problems. Generally, Rufus' liability as a shareholder would be limited
to which one of the following?
Select one:
A. Treble damages
B. The amount of insurance coverage they have
C. The value of their shares
D. The amount of assets they have - -correct ans- -C
Which one of the following statements is correct with respect to the role of a board of directors
in risk oversight?
Select one:
,C.
A. Increasing pressure on boards of directors to provide greater enterprise-wide risk
oversight comes from sources such as investors, rating agencies, and regulators.
B. A 2012 survey of executives revealed that practically all boards have formally assigned
risk oversight responsibility to a board committee.
Financial services organizations are far less subject to regulatory pressure for increased
transparency and risk oversight than are corporations in nonfinancial business sectors.
D. A board's risk management strategy and broad objectives typically have little effect in setting
the tone for risk management across the entire organization. - -correct ans- -A
A corporate board of director's chair person is elected by
Select one:
A. The board of directors.
B. The shareholders.
C. Executive management.
D. Proxies. - -correct ans- -A
Organizations are increasingly creating chief risk officer (CRO) positions. Which one of the
following statements is correct with respect to CROs?
Select one:
A. The CRO's rank and importance to the board of directors are equal to those of the
organization's other executive officers.
B. A 2012 survey indicated that, in companies with annual revenue greater than $20 billion,
fewer than 20% had created a CRO position.
C. Typically, a CRO analyzes, measures, and monitors risk; compiles reports; and facilitates
risk workshops without the need for staff.
D. CROs' roles are relatively standardized from industry to industry; they focus primarily on
measuring and controlling risk. - -correct ans- -A
, C.
All of the following are true regarding the composition of boards of directors, EXCEPT:
Select one:
A. Corporate boards are uniform in size with 13 directors.
B. Boards include both inside directors and outside directors.
Directors elect the chairman of the board.
D. Outside directors serve on the compensation committee. - -correct ans- -A
Which one of the following statements regarding corporate governance and risk oversight is
true?
Select one:
A. Corporate governance and risk oversight have no impact on the value of the organization.
B. Some board of directors delegate risk oversight tasks to board committees, such as the audit
committee, risk committee, and compensation committee.
C. Board oversight should be limited to past history and current conditions, and should avoid
consideration of uncertain future events.
D. Nonfinancial organizations are subject to greater regulatory pressure for transparency and
astute risk management than financial organizations. - -correct ans- -B
The board of directors must use a thorough understanding of the organization's overall risk
philosophy to determine the amount of risk the organization is willing to seek or accept in the
pursuit of long-term objectives. This amount of risk is called the organization's
Select one:
A. Maximum possible loss.
B. Probable maximum loss.
C. Risk appetite.
D. Retention level. - -correct ans- -C
Strategies From Esteemed Educators
Worldwide Graded questions with answers
One corporate governance issue is accountability of directors. One method to increase
accountability of directors is to Select one: A. Include more inside directors.
B. Decrease the independence of audit and compensation committees.
C. Conduct regular meetings of outside directors without management being present.
D. Ensure that the chief executive officer serves as board chairman. - -correct ans- -C
Rufus owns 1500 shares in the ARM Corporation. Recently, ARM has shouldered significant
liabilities due to pollution problems. Generally, Rufus' liability as a shareholder would be limited
to which one of the following?
Select one:
A. Treble damages
B. The amount of insurance coverage they have
C. The value of their shares
D. The amount of assets they have - -correct ans- -C
Which one of the following statements is correct with respect to the role of a board of directors
in risk oversight?
Select one:
,C.
A. Increasing pressure on boards of directors to provide greater enterprise-wide risk
oversight comes from sources such as investors, rating agencies, and regulators.
B. A 2012 survey of executives revealed that practically all boards have formally assigned
risk oversight responsibility to a board committee.
Financial services organizations are far less subject to regulatory pressure for increased
transparency and risk oversight than are corporations in nonfinancial business sectors.
D. A board's risk management strategy and broad objectives typically have little effect in setting
the tone for risk management across the entire organization. - -correct ans- -A
A corporate board of director's chair person is elected by
Select one:
A. The board of directors.
B. The shareholders.
C. Executive management.
D. Proxies. - -correct ans- -A
Organizations are increasingly creating chief risk officer (CRO) positions. Which one of the
following statements is correct with respect to CROs?
Select one:
A. The CRO's rank and importance to the board of directors are equal to those of the
organization's other executive officers.
B. A 2012 survey indicated that, in companies with annual revenue greater than $20 billion,
fewer than 20% had created a CRO position.
C. Typically, a CRO analyzes, measures, and monitors risk; compiles reports; and facilitates
risk workshops without the need for staff.
D. CROs' roles are relatively standardized from industry to industry; they focus primarily on
measuring and controlling risk. - -correct ans- -A
, C.
All of the following are true regarding the composition of boards of directors, EXCEPT:
Select one:
A. Corporate boards are uniform in size with 13 directors.
B. Boards include both inside directors and outside directors.
Directors elect the chairman of the board.
D. Outside directors serve on the compensation committee. - -correct ans- -A
Which one of the following statements regarding corporate governance and risk oversight is
true?
Select one:
A. Corporate governance and risk oversight have no impact on the value of the organization.
B. Some board of directors delegate risk oversight tasks to board committees, such as the audit
committee, risk committee, and compensation committee.
C. Board oversight should be limited to past history and current conditions, and should avoid
consideration of uncertain future events.
D. Nonfinancial organizations are subject to greater regulatory pressure for transparency and
astute risk management than financial organizations. - -correct ans- -B
The board of directors must use a thorough understanding of the organization's overall risk
philosophy to determine the amount of risk the organization is willing to seek or accept in the
pursuit of long-term objectives. This amount of risk is called the organization's
Select one:
A. Maximum possible loss.
B. Probable maximum loss.
C. Risk appetite.
D. Retention level. - -correct ans- -C
