1. Proper risk-return management means that

a. the firm should take as few risks as possible

b. the firm must determine an appropriate trade-off between risk and return.

c. the firm should earn the highest return possible.

d. the firm should value future profits more highly than current profits.

2. Corporate governance is the

a. relationship and exercise of oversight by the board of directors of the company.

b. relationship between the chief financial officer (CFO) and institutional investors.

c. operation of a company by the chief executive officer (CEO) and other senior executives on the management team.

d. governance of the company by the board of directors with a focus on social responsibility.

3. Institutional investors are important in today's business world because

a. as large investors, they have more say in how businesses are managed.

b. they have a fiduciary responsibility to the workers and investors that they represent to see that the firms they own are managed in an ethical way.

c. as a group they can vote large blocks of stock for the election of board members.

d. All of the options