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A company has an audit contract with one Big Four firm and non-audit contracts with two other Big Four firms. Which scenario is most likely to materialize when the company rotates its auditors?

A.

The new auditor will be eligible for new non-audit contracts

B.

There will be a sub-optimal level of competition for the audit

C.

The new auditor will miss material issues that the existing auditor would have identified

A company's reporting and transparency are initially led by its:

A.

Board

B.

Audit committee

C.

Management team

Which of the following best describes an Earth system that will exhibit large-scale and long-term changes when reaching critical levels of global warming?

A.

Tipping elements

B.

Planetary boundaries

C.

Environmental externalities

Which of the following ESG approaches is an investor in sovereign debt most likely to apply?

A.

Active engagement

B.

Exclusionary screening

C.

Stewardship interaction

Which of the following statements about ESG integration in credit ratings is most accurate?

A.

ESG factors do not affect an issuer's ability to convert assets into cash

B.

Rating providers tend to overcomplicate industry weighting and company alignment

C.

There is a geographical bias toward companies in regions with high reporting standards

Which of the following is most likely a consequence of income inequality?

A.

An increase in social mobility

B.

A decrease in educational opportunities

C.

An increase in the number of companies adopting aggressive tax optimization strategies

A framework for assessing environmental risk in project finance is set out by the:

A.

Helsinki Principles

B.

Equator Principles

C.

International Sustainability Standards Board (ISSB)

Which of the following statements about externalities is most accurate?

A.

Externalities are reflected in the prices of commercial goods and services

B.

Private costs are higher than societal costs when externalities are negative

C.

Measures to internalize externalities can be taken by corporates or governments

Within fixed income, ESG integration is most developed in:

A.

Sovereign debt

B.

Corporate bonds

C.

Securitized bonds

Shocks around pay levels at newly privatized utilities led to the:

A.

Dodd-Frank Act

B.

Greenbury Report

C.

Sarbanes-Oxley Act

Which of the following environmental factors for infrastructure projects is most difficult to quantify?

A.

Solid waste

B.

Water pollution

C.

Biodiversity and habitat

When determining ESG investment mandates, an asset owner should consider:

A.

Its tactical asset allocation only

B.

Its strategic asset allocation only

C.

Both its tactical asset allocation and its strategic asset allocation

Which of the following statements about social trends is most accurate?

A.

Social trends have similar impacts on different sectors

B.

The importance of a social trend for a country is independent of the level of its economic development

C.

The impact of a social trend on companies within the same sector may differ based on each company's culture

Which of the following best describes a challenge of ESG integration into investment processes?

A.

Cultural challenges and biases within investment management firms

B.

Overly detailed company-level ESG reporting that overwhelms investors

C.

Standardized disclosures in audited financial statements that hinder differentiated analysis

ESG disclosure among listed companies can be required by:

A.

Stock exchanges only

B.

Security regulators only

C.

Both stock exchanges and security regulators