Question: In 2017, median compensation for directors at the largest U.S. corporations was around:

Answer: $300,000.

Question: Trading stocks in advance of large institutional investment moves is called:

Answer: Front-running.

Question: An example of “insider trading” is:

Answer: A company executive passing nonpublic information about an upcoming acquisition to a friend, who traded for a profit.

Question: The directors of a company are a central factor in corporate governance because they:

Answer: Exercise formal legal authority over company policy.

Question: An argument in support of high executive compensation is:

Answer: High salaries provide an incentive for innovation and risk-taking.

Question: The board committee that administers and approves salaries and benefits of high-level managers in a company is called:

Answer: Compensation.

Question: A legal right of shareholders is:

Answer: To vote on members for the board of directors.

Question: Institutional investors are best described by which statement?

Answer: Institutions invest their funds by purchasing shares of stock in corporations on behalf of their investors or members.

Question: The mission of the Securities and Exchange Commission (SEC) is to:

Answer: Protect shareholders’ rights by making sure that stock markets are run fairly.

Question: A reason for institutions becoming more assertive in promoting the interests of their member investors is:

Answer: Expressing dissatisfaction with management performance by selling a large block of stock would reduce the value of the institution’s holdings.