Question 1

What is the main role of a stock exchange?

Accepted Answer

A)  To act as a primary and secondary capital market for businesses. 
B)  To act as a primary capital market for businesses. 
C)  To act as a secondary capital market for businesses. 
D)  To act as a primary capital market for businesses and government. 
E)  To act as a secondary capital market for businesses and government. 
A)  To act as a primary and secondary capital market for businesses. 
B)  To act as a primary capital market for businesses. 
C)  To act as a secondary capital market for businesses. 
D)  To act as a primary capital market for businesses and government. 
E)  To act as a secondary capital market for businesses and government.

Question 2

Bontempo Electronics Inc. has total assets of $81 million, financed by $36 million of debt and $45 million of equity where the contributed common shares account for $12 million. There are 2.4 million shares outstanding. The directors of Bontempo Electronics have declared a stock dividend of one share for every three shares held. If the market value of the shares is $27.50 before the stock dividend, which of the following is the best conclusion to make?

Accepted Answer

A)  Shareholders will experience an increase in their wealth of $4 million. 
B)  The company has effectively reduced its debt to equity ratio. 
C)  Shareholders will suffer a dilution of their future earnings by 33%. 
D)  Shareholders will experience an increase in their wealth of $22 million. 
E)  There has been no change in shareholders' wealth. 
A)  Shareholders will experience an increase in their wealth of $4 million. 
B)  The company has effectively reduced its debt to equity ratio. 
C)  Shareholders will suffer a dilution of their future earnings by 33%. 
D)  Shareholders will experience an increase in their wealth of $22 million. 
E)  There has been no change in shareholders' wealth.

What is the main role of a stock exchange?

Introduction to Financial Management

Accounting - the Language of Business

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters

Exam 9: Financing a Business 2: Raising Long-Term Funds

What is the main role of a stock exchange?

Introduction to Financial Management

Accounting - the Language of Business

Financial Planning and Pro Forma Financial Statements

Analyzing and Interpreting Financial Statements

The Time Value of Money

Making Capital Investment Decisions

Making Capital Investment Decisions: Further Issues

Financing a Business 1: Sources of Funds

The Cost of Capital and the Capital Structure Decision

Developing a Dividend Policy

Managing Working Capital

Measuring and Managing for Shareholder Value

Mergers, Acquisitions, and the Valuation of Shares

Filters