Advanced Corporate Finance
Exam Questions
Course Introduction
Advanced Corporate Finance delves into the complex financial decisions faced by modern corporations, exploring topics such as capital structure, corporate valuation, mergers and acquisitions, risk management, and financial policy. The course emphasizes analytical frameworks and quantitative tools for decision-making under uncertainty, integrating real-world case studies and current market developments. Students will critically examine how financing and investment choices influence firm value, considering both theoretical models and practical constraints. Through in-depth analysis and application, this course prepares students for strategic roles in corporate finance, investment banking, and financial consulting.
Recommended Textbook Principles of Corporate Finance 11th Edition by
Richard A Brealey
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Page 2
Chapter 1: Introduction to Corporate Finance
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Sample Questions
Q1) Shareholders of a corporation may be,among others: i.individuals; II)pension funds; III)insurance companies
A)I only
B)I and II only
C)II only
D)I,II,and III
Answer: D
Q2) Mr.Thomas has $100 income this year and zero income next year.The market interest rate is 10% per year.Mr.Thomas also has an investment opportunity in which he can invest $50 this year and receive $80 next year.Suppose Mr.Thomas consumes $50 this year and invests in the project.What will be his consumption next year?
A)$50
B)$55
C)$80
D)$110
Answer: C
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Chapter 2: How to Calculate Present Values
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Q1) The one-year discount factor,at an interest rate of 100% per year,is:
A)1.50.
B)0.50.
C)0.25.
D)1.00.
Answer: B
Q2) What is the present value of $10,000 per year in perpetuity at an interest rate of 10%?
A)$10,000
B)$100,000
C)$200,000
D)$1,000
Answer: B
Q3) An initial investment of $400,000 is expected to produce an end-of-year cash flow of $480,000.What is the NPV of the project at a discount rate of 20%?
A)$176,000
B)$80,000
C)$0 (zero)
D)$64,000
Answer: C
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Chapter 3: Valuing Bonds
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Q1) If a bond pays interest semiannually,then it pays interest:
A)once per year
B)every six months
C)every three months
D)every two years
Answer: B
Q2) What is the relationship between interest rates and bond prices?
Answer: Interest rates and bond prices are inversely related.Higher interest rates cause bond prices to fall and vice versa.For a given change in interest rates,prices of long-term bonds fluctuate more than those of short-term bonds.Similarly,for a given change in interest rates,low-coupon bond prices fluctuate more than those of high-coupon bonds.
Q3) A bond with duration of 10.0 years has a yield to maturity of 10.0%.This bond's volatility is:
A)9.09%
B)6.80%
C)14.6%
D)10.00%
Answer: A
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Chapter 4: The Value of Common Stocks
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Q1) Deluxe Company expects to pay a dividend of $2 per share at the end of year 1,$3 per share at the end of year 2,and then be sold for $32 per share at the end of year 2.If the required rate of return on the stock is 15%,what is the current value of the stock?
A)$28.20
B)$32.17
C)$32.00
D)$29.18
Q2) World-Tour Co.has just now paid a dividend of $2.83 per share (D<sub>0</sub>); its dividends are expected to grow at a constant rate of 6% per year forever.If the required rate of return on the stock is 16%,what is the current value of the stock,after paying the dividend?
A)$70
B)$56
C)$30
D)$48
Q3) The valuation of a common stock today primarily depends on:
A)the number of shares outstanding and the number of its shareholders.
B)its expected future dividends and its discount rate.
C)Wall Street analysts.
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Page 6
Chapter 5: Net Present Value and Other Investment Criteria
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Q1) What are some of the disadvantages of using the IRR method?
Q2) Which of the following investment rules has the value additivity property?
A)the payback period method
B)the net present value method
C)the book rate of return method
D)the internal rate of return method
Q3) The benefit-cost ratio is equal to the profitability index plus one.
A)True
B)False
Q4) If the sign of the cash flows for a project changes two times,then the project likely has:
A)one IRR.
B)two IRRs.
C)three IRRs.
D)four IRRs.
Q5) The net present value of a project depends upon the:
A)company's choice of accounting method.
B)manager's tastes and preferences.
C)project's cash flows and opportunity cost of capital.
D)company's profitability index.
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Chapter 6: Making Investment Decisions With the Net
Present Value Rule
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Q1) Proper treatment of inflation in NPV calculations involves:
I.discounting nominal cash flows by the nominal discount rate;
II.discounting real cash flows by the real discount rate;
III.discounting nominal cash flows by the real discount rate
A)I only
B)II only
C)III only
D)I and II only
Q2) Suppose that a project has a depreciable investment of $600,000 and falls under the following MACRS year 5 class depreciation schedule:
Year 1: 20%; year 2: 32%; year 3: 19.2%; year 4: 11.5%; year 5: 11.5%; and year 6: 5.8%.
Calculate depreciation for year 2.
A)$120,000
B)$192,000
C)$96,000
D)$115,200
Q3) When calculating cash flows,one should consider all incidental effects.
A)True
B)False
Page 8
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Chapter 7: Introduction to Risk and Return
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Q1) Spill Drink Company's stocks had -8%,11%,and 24% rates of return during the last three years respectively; calculate the (arithmetic)average rate of return for the stock.
A)8% per year
B)9% per year
C)10% per year
D)11% per year
Q2) The type of the risk that can be eliminated by diversification is called:
A)market risk
B)unique risk
C)interest rate risk
D)default risk
Q3) In the formula for calculating the variance of an N-stock portfolio,how many covariance and variance terms are there?
Q4) Which portfolio has had the highest average risk premium during the period 1900-2011?
A)Common stocks
B)Government bonds
C)Treasury bills
D)None of the answers
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Chapter 8: Portfolio Theory and the Capital Asset Pricing Model
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Sample Questions
Q1) Florida Company (FC)and Minnesota Company (MC)are both service companies.Their stock returns for the past three years were: FC: -5%,15%,20%; MC: 8%,8%,20%.
Calculate the variances of returns for FC and MC.
A)FC: 100 MC: 256
B)FC: 350 MC: 96
C)FC: 175 MC: 48
D)FC: 48 MC: 175
Q2) The Sharpe ratio is defined as:
A)(r<sub>P</sub> - r<sub>f</sub>)/ <sub>P</sub>.
B)(r<sub>P</sub> - r<sub>M</sub>)/ <sub>P</sub>.
C)(r<sub>P</sub> - r<sub>f</sub>)/ <sub>P</sub>.
D)(r<sub>P</sub> - r<sub>M</sub>)/ <sub>P</sub>.
Q3) A factor in APT is a variable that:
A)is pure "noise".
B)correlates with risky asset returns in an unsystematic manner.
C)correlates with the returns of risky assets in a systematic manner.
D)affects the returns of risky assets in a random manner.
Q4) Most investors dislike uncertainty.
A)True
B)False
Page 10
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Chapter 9: Risk and the Cost of Capital
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Q1) The market value of Cable Company's equity is $60 million and the market value of its debt is $40 million.If the required rate of return on the equity is 15% and that on its debt is 5%,calculate the company's cost of capital.(Assume no taxes.)
A)15%
B)10%
C)11%
D)9%
Q2) A project has an expected risky cash flow of $500 in year 3.The risk-free rate is 4%,the expected market rate of return is 14%,and the project's beta is 1.20.Calculate the certainty equivalent cash flow for year 3,CEQ<sub>3</sub>.
A)$622.04
B)$360.33
C)$401.90
D)$693.82
Q3) An analyst should evaluate each project at its own opportunity cost of capital.The true cost of capital depends on the particular use of that capital.
A)True
B)False
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11
Chapter 10: Project Analysis
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Q1) You obtain the following data for year 1: Revenue = $43; Variable costs = $30; Depreciation = $3; Tax rate = 30%.Calculate the operating cash flow for the project for year 1.
A)$7
B)$10
C)$13
D)$16
Q2) The Financial Calculator Company proposes to invest $12 million in a new calculator-making plant.Fixed costs are $3 million per year.A financial calculator costs $10 per unit to manufacture and sells for $30 per unit.If the plant lasts for four years and the cost of capital is 20%,what is the break-even level of annual sales? (Assume that revenues and costs occur at the end of each year.Assume no taxes.)Round to the nearest 1,000 units.
A)150,000 units
B)342,000 units
C)382,000 units
D)300,000 units
Q3) Monte Carlo simulation is mostly an advanced version of scenario analysis.
A)True
B)False
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Chapter 11: Investment, Strategy, and Economic Rents
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Q1) You inherited 100 acres of Iowa farmland.There is an active market in this type of land,and similar properties currently sell for $10,000 per acre.If planted with corn,you expect that the land will deliver net cash flows of $800 per acre forever.If the discount rate is 10%,how much is the land worth per acre?
A)$10,000
B)$8,000
C)$18,000
D)$12,000
Q2) In order to generate a positive NPV project,a firm must have an economic advantage over its competitors.
A)True
B)False
Q3) Briefly explain the main difference between the capital budgeting process and the strategic planning process.
Q4) The NPV of a project can be thought of as the present value of its: A)economic rents. B)profits.
C)revenues.
D)salvage value.
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Chapter 12: Agency Problems, Compensation, and Performance Measurement
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Q1) The following are agency problems associated with capital budgeting except:
A)reduced effort.
B)maximizing firm value.
C)empire building.
D)perks.
Q2) According to the survey of senior managers by Graham,Harvey,and Rajgopal,senior managers admitted to the following:
I.adjusting their firms' operations and investments in order to manage earnings;
II.decreasing discretionary spending in R&D,advertising,or maintenance to meet earnings targets;
III.deferring or rejecting investment projects with positive NPVs in order to meet earnings targets
A)I only
B)II only
C)I and II only
D)I,II,and III
Q3) Briefly explain how a plant manager can improve EVA (economic value added)?
Q4) What are some of the agency problems associated with capital budgeting?
Page 14
Q5) Define the term economic rate of return.
Q6) Define the term economic income.
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Chapter 13: Efficient Markets and Behavioral Finance
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Q1) Generally,a firm is able to find positive-NPV opportunities among its: i.financing decisions; II)capital investment decisions; III)short-term borrowing decisions
A)I only
B)I and III only
C)III only
D)II only
Q2) When a firm announces a dividend change,or publishes its latest earnings,the major part of any price adjustment usually takes place within a few minutes of the announcement.
A)True
B)False
Q3) State the weak form of market efficiency and its implications.
Q4) Investors are particularly averse to the possibility of even a very small loss and need a high return to compensate for it.Such a concept is related to which theory?
A)market efficiency theory
B)random walk theory
C)convergence trading
D)prospect theory
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Chapter 14: An Overview of Corporate Financing
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Q1) If you own 1,000 shares of common stock of a firm and there are five directors being elected,what is the maximum number of votes you can cast for a particular director under cumulative voting?
A)5,000
B)1,000
C)200
D)5
Q2) If you own 1,000 shares of stock and you can cast 5,000 votes for a particular director,then the stock features:
A)cumulative voting.
B)straight voting.
C)majority voting.
D)proxy voting.
Q3) Exploitation of minority shareholders by majority shareholders is called:
A)a reverse stock split.
B)tunneling.
C)financial engineering.
D)proxy fighting.
Q4) Briefly explain the voting rights of shareholders.
Q5) Briefly describe the different types of financial markets.
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Chapter 15: How Corporations Issue Securities
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Q1) Large technology firms like Intel,Johnson and Johnson,and Sun Microsystems that provide equity capital to new innovative companies are called:
A)angel investors.
B)corporate venturers.
C)white knights.
D)mezzanine financiers.
Q2) The SEC provision under which qualified institutional investors can trade privately placed securities among themselves is called:
A)Rule 144A.
B)Rule 415.
C)the Sarbanes-Oxley Act.
D)none of the options.
Q3) The managing underwriter is also called the:
A)syndicate.
B)book runner.
C)specialist.
D)lead angel.
Q4) Briefly explain the role of underwriters in the issuance of securities.
Q5) Briefly explain the term initial public offering (IPO).
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Chapter 16: Payout Policy
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Q1) Firms can repurchase shares in the following ways: i.open market repurchase; II)tender offer; III)Dutch auction; IV)direct negotiation with a major shareholder
A)I only
B)II only
C)III only
D)I,II,III,and IV
Q2) An alternative to paying cash dividends is to pay stock dividends.
A)True
B)False
Q3) According to the middle-of-the-roaders,a firm's value is not affected by its dividend policy because:
I.of the clientele effect;
II.of the tax loopholes available to wealthy stockholders; III.well-managed companies prefer to signal their worth by paying high dividends
A)I only
B)II only
C)III only
D)I,II,and III
Q4) What information does a share repurchase convey to investors?
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Chapter 17: Does Debt Policy Matter
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Q1) The effect of financial leverage on the performance of the firm depends on the:
A)expected rate of return on equity.
B)firm's level of operating income.
C)current market value of the debt.
D)rate of dividend growth.
Q2) A firm has a debt-to-equity ratio of 1.Its levered cost of equity is 16%,and its cost of debt is 8%.If there were no taxes,what would be its cost of equity if the debt-to-equity ratio were zero?
A)8%
B)10%
C)12%
D)14%
Q3) Generally,which of the following is true?
A)r<sub>E</sub> < r<sub>D</sub> < r<sub>A</sub>
B)r<sub>D</sub> < r<sub>A</sub> < r<sub>E</sub>
C)r<sub>E</sub> < r<sub>A</sub> < r<sub>D</sub>
D)r<sub>D</sub> < r<sub>E</sub> < r<sub>A</sub>
Q4) Explain why,as a function of the debt-equity ratio,the cost of debt graph is concave at high levels of debt.
Q5) State the generalized version of Modigliani-Miller Proposition I.
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Chapter 18: How Much Should a Corporation Borrow
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Q1) MM Proposition I with corporate taxes states that:
I.capital structure can affect firm value by an amount that is equal to the present value of the interest tax shield;
II.by raising the debt-to-equity ratio,the firm can lower its taxes and thereby increase its total value;
III.firm value is maximized by using an all-equity capital structure
A)I only
B)II only
C)III only
D)I and II
Q2) For every dollar of operating income paid out as interest,the bondholder realizes:
A)(1 - Tp)
B)(1 - Tp<sub>E</sub>)(1 - T<sub>C</sub>)
C)(1 - T<sub>C</sub>)
D)1/(1 - T<sub>C</sub>)
Q3) Discuss the basic idea behind Miller's arguments about debt and taxes.
Q4) What is the relative tax advantage of debt when corporate and personal taxes are considered?
Q5) Explain the impact of government loan guarantees on corporate financing.
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Chapter 19: Financing and Valuation
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Q1) Capital budgeting projects that incorporate both investment and financing decision side effects can be properly analyzed by:
I.adjusting the project's present value (APV);
II.adjusting the project's discount rate (WACC);
III.relying only on MM Propositions I and II
A)I only
B)II only
C)III only
D)I and II only
Q2) The market value of debt is very close to the book value of debt for healthy firms. A)True B)False
Q3) Discuss the advantages and limitations of using the weighted average cost of capital as a discount rate to evaluate capital budgeting projects.
Q4) What method would you tend to use for evaluating international projects?
Q5) Briefly explain how the firm's equity beta changes with changes in its debt-equity ratio when taxes are considered.
Q6) Briefly explain how WACC can be used for valuing a business.
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Chapter 20: Understanding Options
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Q1) An increase in the underlying stock price results in an increase in a call option's price.
A)True
B)False
Q2) Call options can have a positive value at expiration even when the underlying stock is worthless.
A)True
B)False
Q3) Briefly explain what is meant by protective put.
Q4) If the stock makes a dividend payment before the expiration date,then the put-call parity relation is:
A)Value of call = value of put + share price - present value (PV)of dividend - PV of exercise price.
B)Value of call = value of put - share price + PV of dividend - PV of exercise price.
C)Value of call = value of put + share price + PV of dividend + PV of exercise price.
D)Value of call = value of put + share price + PV of dividend - PV of exercise price.
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23
Chapter 21: Valuing Options
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Q1) If u equals the quantity (1 + upside change),then the quantity (1 + downside change)is equal to:
A)-u.
B)-1/u.
C)1/u.
D)1 - u.
Q2) If the delta of a call option is 0.4,calculate the delta of an equivalent put option:
A)0.6.
B)0.4.
C)-0.4.
D)-0.6.
Q3) Briefly explain why the discounted cash-flow method (DCF)does not work for valuing options.
Q4) Briefly explain put-call parity.
Q5) The value of a call option increases as the risk-free interest rate increases. A)True
B)False
Q6) Briefly discuss risk-neutral valuation in the context of option valuation.
Q7) Briefly explain how to choose the up and down values for the binomial method.
Page 24
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Chapter 22: Real Options
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Q1) How does a large firm like Intel hold a natural real option on a new technology,whereas a smaller firm would not have the same option if they owned the same technology?
Q2) An electric utility plant that can operate on either oil or natural gas is an example of flexibility in production.
A)True
B)False
Q3) If projects have implied options,then:
A)the shorter the forecasted life of the project the less valuable the option is.
B)the longer the forecasted life of the project the less valuable the option is.
C)the shorter the forecasted life of the project the more valuable the option is.
D)project life does not change the value option.
Q4) Explain the main difference between the Black-Scholes formula and the binomial method.How does this relate to real options analysis?
Q5) Briefly explain the implied assumption when the risk-neutral method is used for valuing real options.
Q6) Briefly explain how temporary abandonment can be thought of as a complex option.
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Chapter 23: Credit Risk and the Value of Corporate Debt
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Q1) In 2012,the Greek government strong-armed private investors into replacing their existing bonds with new securities worth what percentage of their original bonds?
A)30%
B)40%
C)50%
D)60%
Q2) It is extremely rare for a corporate bond to have a higher expected yield than a government bond.
A)True
B)False
Q3) Which of the following rated bonds has the most risk?
A)Aaa
B)Aa
C)Baa
D)Ba
Q4) Briefly explain how governmental loan guarantees can be valued using the option pricing model.
Q5) Briefly explain the model developed by Beaver,McNichols,and Rhie to predict the chance of failure of a firm.
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Chapter 24: The Many Different Kinds of Debt
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Q1) In general,which of the following statements is true?
A)Bonds issued in the United States pay interest annually,while bonds issued in other countries pay interest semiannually.
B)Bonds issued in the United States and other countries pay interest semiannually.
C)Bonds issued in the United States and other countries pay interest annually.
D)Bonds issued in the United States pay interest semiannually,while bonds issued in other countries pay interest annually.
Q2) Firms often bundle up a group of assets and then sell the cash flows from these assets in the form of securities.They are called:
A)debentures.
B)subordinated issues.
C)asset-backed securities.
D)mortgage bonds.
Q3) Project finance is generally provided by:
A)the U.S.government.
B)foreign governments.
C)international banks.
D)the World Bank.
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Chapter 25: Leasing
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Q1) The cost of a seven-year lease is $150,000 per year and matches the exact cost of a loan to finance the purchase of equipment.All else equal,and given a usable life of seven years with no salvage value,what is the advantage of a lease given a discount rate of 7% and no taxes?
A)$0
B)$800,000
C)$1,500,000
D)$2,000,000
Q2) If a firm can borrow at 9%,what discount rate should the firm use to discount lease cash flows? (The marginal tax rate for the firm is 35%.)
A)3.15%
B)5.85%
C)9.00%
D)0.00%
Q3) Under a leveraged lease,the lessee borrows money and then uses these funds to make the lease payments.
A)True
B)False
Q4) What advantage does a sale-lease-back to a SPE have?
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Chapter 26: Managing Risk
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Q1) Suppose that the current level of the S&P 500 Index is 1100.The prospective dividend yield is 3%,and the current risk-free interest rate is 7%.What is the value of a one-year futures contract on the index? (Assume all dividends are paid at the end of the year.)
A)1056
B)1144
C)1210
D)995
Q2) Which of the following players would require a put option in order to hedge their natural position in the market?
A)A farmer who buys corn to feed his livestock
B)A farmer who sells peanuts to a chocolatier
C)A farmer who has financed his land with a floating rate mortgage
D)A miller who buys wheat from a farmer
Q3) A derivative is a financial instrument whose value is determined by:
A)a regulatory body such as the FTC.
B)the value of an underlying asset.
C)hedging a risk.
D)speculation.
Q4) Briefly explain how a firm can hedge its risks using options.
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Chapter 27: Managing International Risks
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Q1) An Australian firm is evaluating a proposal to build a new plant in the U.S.The expected cash flows in $US (in millions)are as follows: Year 0,-100; Year 1,40; Year 2,50; Year 3,65.The discount rate in $A is 10%,while the discount rate in $US is 12% and the spot rate is $US0.60/$A.Calculate the NPV of the project in $US.
A)+36.40
B)-21.84
C)+13.10
D)+21.84
Q2) An organized market for currency for future delivery that conducts trades on an exchange is called a(n):
A)spot market.
B)forward market.
C)futures market.
D)options market.
Q3) Briefly explain the expectations theory of forward exchange rates.
Q4) The true cost of hedging foreign currency risk is the difference between the forward rate and the expected spot rate.
A)True
B)False
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Chapter 28: Financial Analysis
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Q1) The difference between current assets of a firm and its current liabilities is called:
A)net tangible fixed assets.
B)net working capital.
C)gross working capital.
D)net worth.
Q2) Assume the following data: EBIT = 400; Tax = 100; Sales = 3000; Average total assets = 1500.Calculate the ROA (return on assets).
A)10%
B)20%
C)7.5%
D)26.7%
Q3) Assume the following data: Current assets = 500; Current liabilities = 250; Inventory = 200; Account receivables = 200.Calculate the current ratio.
A)2.0
B)1.5
C)1.0
D)2.5
Q4) What are the three basic financial statements?
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Chapter 29: Financial Planning
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Q1) Most firms make a permanent investment in net working capital.
A)True
B)False
Q2) A firm that chooses Strategy B,as portrayed in Chapter 29,should plan to:
A)maintain a high ratio of current assets to sales.
B)use low or no short-term debt and more long-term financing.
C)repurchase a substantial number of shares.
D)be a short-term lender during a part of the year and a borrower during the rest.
Q3) Two common sources of short-term financing are borrowing from a bank and stretching payables.
A)True
B)False
Q4) A firm can achieve a higher growth rate (within limits)without raising external capital by:
A)increasing the proportion of debt in its capital structure.
B)increasing its current ratio.
C)decreasing its inventory turnover.
D)increasing its plowback ratio.
Q5) Discuss the process of preparing a short-term financial plan.
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Chapter 30: Working Capital Management
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Q1) The High-Rise Building Company (HRBC)uses 400,000 tons of stone per year.The carrying costs are $100/ton.The cost per order is $500.Calculate the optimal carrying costs.(Assume a linear usage rate and that HRBC runs its inventory down close to zero as the replenishment order arrives.)
A)$200,000
B)$100,000
C)$75,000
D)$50,000
Q2) The following are advantages of electronic payment systems except:
A)record keeping is easy.
B)marginal cost of transaction is low.
C)float is drastically reduced.
D)initial investment is high.
Q3) Direct deposits are processed through Automated Clearing House (ACH)system.
A)True
B)False
Q4) A factor buys a firm's receivables,and then the firm's customer makes payments directly to the factor.
A)True
B)False
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Chapter 31: Mergers
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Q1) Firm A has a value of $200 million and Firm B has a value of $120 million.Merging the two would enable cost savings with a present value of $30 million.Firm A purchases Firm
B for $130 million.How much do Firm A's shareholders gain from this merger?
A)$30 million
B)$20 million
C)$15 million
D)$10 million
Q2) Discuss the difficulties associated with a typical merger.
Q3) A modification of the corporate charter that requires 80% shareholder approval for a takeover is called a(n):
A)repurchase standstill provision.
B)exclusionary self-tender.
C)supermajority amendment.
D)tender offer.
Q4) The merger between Comcast and NBC Universal is an example of a:
A)horizontal merger.
B)vertical merger.
C)conglomerate merger.
D)none of these options.
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Chapter 32: Corporate Restructuring
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Q1) Private-equity investment funds are organized as:
A)C-corporations.
B)sole proprietorships.
C)partnerships.
D)nonprofit corporations.
Q2) Leveraged restructurings are designed to force mature,successful,but overweight firms to:
A)reduce cash.
B)reduce operating costs.
C)use assets more efficiently.
D)all of these options.
Q3) Private-equity partnerships avoid the free cash flow problem that often troubles conglomerates.
A)True
B)False
Q4) Spin-offs are not taxed as long as shareholders of the parent company are given at least 80% of the shares in the new company.
A)True
B)False
Q5) What is a leveraged buyout?
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Chapter 33: Governance and Corporate Control Around the World
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Q1) In which of the following countries do individual investors play the largest role in corporate governance?
A)U.S.
B)U.K.
C)Japan
D)Germany
Q2) Japan has a "main bank" system where banks and firms have long-standing relationships.
A)True
B)False
Q3) In which area do households allocate the highest percentage of their portfolio to direct equity ownership?
A)U.S.
B)Japan
C)U.K.
D)Euro area
Q4) Name Germany's two boards of directors,and briefly explain why large firms in Germany have two boards of directors.
Q5) What is corporate governance?
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